For Immediate Release

Chicago, IL – May 6, 2009 – Zacks Equity Research picks Sierra Wireless (SOHU) as Bull of the Day and CenturyTel (CTL) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on Citigroup (C), Bank of America (BAC) and Morgan Stanley (MS).

Full analysis of all these stocks is available at: http://at.zacks.com/?id=2678

Bull of the Day

Sohu.com, Inc. (SOHU) is the second-largest Internet portal and one of the most well-known online brands in China. Sohu’s pipeline for its new online games remains strong and is expected to drive meaningful growth in late 2009 and 2010.

The company spun-off part of its gaming division Changyou.com via an ADS offering, which is expected to increase its user base and help gain shares in the MMORPG (massively multi-player online role-playing game) market. We are also encouraged by the company’s growing cash balance as well as its debt-free balance sheet.

We believe that the current stock price does not fully reflect the company’s intrinsic value. Concerns related to online ad spending, as consumers remain cautious in their spending. We maintain our Buy rating on the shares of SOHU and raise our six-month target price to $75.00.

Bear of the Day

We downgrade our rating to Sell for CenturyTel (CTL) based on valuation, after assessing the company’s guidance for second quarter 2009 that was below our expectations. We also believe that the Embarq merger planned by CTL, scheduled to be completed in mid-2009, may be more challenging in terms of integration and deriving cost savings synergies.

Meaningful merger-related synergies are not likely before 2011, in our opinion, offering limited opportunity for near-term operational improvement. While we expect growth in broadband Internet to remain robust, the near-term outlook dictated by management’s financial guidance is weak as declines in traditional voice and network access business offset gains in broadband Internet.

We also remain concerned with a highly-leveraged balance sheet that is likely to be further burdened with the assumption of approximately $5.7 billion in Embarq debt upon deal closure.

Recent Analysis from the Analyst Blog

What Are the Banks Haggling Over?

While it is unclear how flexible the regulators will be about adjusting the assessments, it is being reported that some banks are trying to convince them to use their first-quarter 2009 results to project their revenues for the next two years. This has a potential of further undermining the credibility of the stress tests, which are already being widely criticized for not being “stressful enough.”

Many banks had strong first-quarter performances results, which are not sustainable, as the banks themselves have admitted. Near-zero funding costs and a surge in refinancing due to record-low mortgage rates and better revenues from fixed income trading (resulting from the high volatility) helped the results.

While we do not expect the rates to go up in the near term, they will not remain at current levels over the next two years. Once the Fed sees signs of inflation in the economy, it will have to raise the rates and also stop/slow down its purchases of mortgage-backed securities.  

And some banks benefited from strange accounting rules. Citigroup (C) recorded a profit of $2.5 billion, and Bank of America (BAC) recorded a profit of $2.2 billion, resulting from widening of their credit spreads (worsening of creditworthiness), and on the other hand Morgan Stanley (MS) recorded a loss of $1.5 billion due to the tightening of its credit spreads.

So if the credit spreads tighten for Citi and Bank of America in near future (are the stress tests not supposed to increase the confidence in the banking system?), will they not be required to record huge losses?

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: 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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Contact:Mark VickeryWeb Content Editor312-265-9380Visit: www.zacks.com

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