Zacks Bull and Bear of the Day Highlights: Center Financial Corp., Merck, Sinopec Shanghai Petrochemical and Homestore.

CHICAGO -- Zacks Equity Research highlights Center Financial Corp. (Nasdaq:CLFC) as the Bull of the Day and Merck & Company (NYSE:MRK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sinopec Shanghai Petrochemical (NYSE:SHI) and Homestore, Inc. (Nasdaq:MOVE). Full analysis of all four stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all four stocks:

Bull of the Day:

Our Bull of the Day recommendation is for Center Financial Corp. (Nasdaq:CLFC). CLFC remains the cheapest stock in the peer group on a PEG basis and on ROE-adjusted P/B. We project core ROE of 22% in 2006, well above peer levels. We also expect roughly $1.50 in book value growth, implying more than $5 of price appreciation at the current P/B multiple, and our target price implies over 21% upside. In spite of beating our estimates, Q1 was a bit soft overall. NII was well below our projections on a combination of weak loan growth and a huge drop in NIM. Management discussed both in detail, and we are hopeful of improvement on both fronts, but this clearly deserves a close eye in Q2. We view the $0.16 annual dividend as secure.

Bear of the Day:

Our Bear of the Day recommendation is for Merck & Company (NYSE:MRK). We believe Merck's stock offers limited upside given the mounting legal liabilities facing the company. Sales of many key drugs are expected to decline by 2008. Likewise, Merck's drug pipeline will not be able to help the company deliver meaningful top-line growth until much later in the decade. We believe there are far better opportunities in the pharmaceutical and biotechnology sector. We would avoid the name through the summer given the dozen or so Vioxx trials expected to reach a verdict in the second quarter. Our $30 price target is based on 2006 multiple of 12.5x.

Analyst Blog:

Sinopec Shanghai Petrochemical's (NYSE:SHI) exposure to the fast-growing Chinese economy and strong petrochemical product demand make us confident of strong volume growth in 2006. However, volatility in crude oil prices and intensified competition may affect SHI's profitability in the long run. Thus, we rate the stock a Hold, with a six-month target price of $46.00.

In Q4, Homestore, Inc.'s (Nasdaq:MOVE) revenue was in line with our expectations, rising 23% year over year. EPS was a cent above our estimate. Real Estate Services revenue rose 29% year over year, and the operating margin increased to 31% from 22%. Nevertheless, margins in the Move-Related Services segment were under pressure and should remain so in 2006 due to continued investments.

Get the full analysis of all four stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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