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Inside Wall Street


At Disney's Parks, a Surprising Ascent

Despite high gas prices and the spike in airline fares exacerbated by flight cutbacks, Walt Disney (DIS) has pretty much avoided serious bumps. The entertainment giant, whose theme parks were expected to take a big fall in attendance, beat the Street's dim third-quarter forecasts. Instead, Disney delivered solid results for the third quarter ended June 28, with earnings of 66 cents a share vs. 58 cents a year ago. Its parks posted a 5% rise in sales.

"The results solidified Disney's best-in-class status operationally," says media analyst Mark Wienkes of Goldman Sachs (GS) (it did business with Disney), "by leveraging its content franchises across multiple platforms." He rates the stock, which has fallen to 31.42 a share from 35 a year ago, a buy with a yearend target of 35. The Burbank (Calif.) company's businesses, including films, TV, and cable, aren't immune to cyclical pressures. Even so, Wienkes forecasts an 8% rise in fourth-quarter earnings on the "resiliency of its asset mix." He also upped his 2008 earnings estimate to $2.28 from $2.25 a share on sales of $37.6 billion. For 2009 he sees $2.35 a share on $38.2 billion. Disney has been buying back stock—$1.5 billion in the first quarter, $900 million in the second, $1.5 billion in the third.

Laura Martin of New York-based Soleil Securities rates Disney a buy with a 12-month target of 40 based on a steady earnings growth rate.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

VIA Gets the Bulls' Blood Going

What the hedge funds giveth, they can taketh back fast, with little or no warning. That's how VIA Pharmaceuticals (VIAP) shares crumbled: Three such major holders dumped 1.5 million shares, driving the stock down to 1.69 from 3.10 in March. But that hasn't fazed the bulls. "Via is now even more attractive at this price," says Soham Pandya of investment firm ThinkPanmure (it did business with Via). He pegs the stock a buy with a target of 5. It hit 10 on Jan. 18, 2007.

Via's lead compound, VIA-2291, seeks to reduce inflammation in blood vessel walls, an underlying cause of atherosclerosis and related ailments, including heart attack and stroke, says CEO Larry Cohen. It is in Phase II clinical tests, and Pandya expects positive data by yearend. Vernon Bernardino of Rodman & Renshaw remains positive about the drug's prospects and rates VIA outperform.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

China Direct: A Magnesium Bet

China Direct (CDS) isn't your run-of-the-mill company: The Deerfield Beach (Fla.) outfit does business in China through China-based companies in which it has controlling stakes. "It's one of the fastest-growing companies in the U.S.," says President Marc Siegel, who owns 17% of China Direct. "Earnings jumped from $169,000 in 2006 on sales of $14 million to an estimated profit of $26 million in 2008 on $320 million."

China Direct now controls eight Chinese companies, including four that process magnesium, used in metallurgy and manufacturing. China produces 80% of the world's magnesium; China Direct's share is 15% of that output, says Otis Bradley of Gilford Securities. He rates the stock, now at 7.30, a buy. Global Hunter Securities' Ping Luo says magnesium will drive growth for Direct (a client) and sees the stock at 13 in a year.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Marcial writes the Inside Wall Street column for BusinessWeek. In 2008, FT Press published the book Gene Marcial's 7 Commandments of Stock Investing.


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