"We are pleased with our solid financial results for the third quarter and our strong student enrollment for the fall term," said Robert S. Silberman, Chairman and CEO of Strayer Education, Inc. "We look forward to opening 13 new campuses in 2010. For the 2010 winter term, we will add three new Strayer markets with new campuses in New Brunswick and Lawrenceville, New Jersey and Little Rock, Arkansas."

Bullish Forecasts

Strayer said based on the strong enrollment numbers and the planned investments in opening new campuses, it sees fourth-quarter earnings ranging between $2.28 to $2.30 per share. For 2009, the company is expecting earnings to range between $7.56 to $7.58 per share. Analysts polled by Zacks are in agreement.

Read the October 8 commentary on STRA.

Last Week's Growth and Income Zacks Rank Buy Stocks

DeVry Inc. (DV) recently announced a record fiscal first quarter. Earnings per share of 76 cents topped last year's 48 cents and exceeded the Zacks Consensus Estimate by 17%. Read the whole story on DV.

Wolverine World Wide Inc. (WWW) recently posted third-quarter earnings of 62 cents per share, eclipsing the Zacks Consensus Estimate by 11%. The company hiked its full-year earnings guidance, and analysts followed suit, lifting the Zacks Consensus Estimate to $1.74 per share from last month's $1.68. Shares spiked on the strong quarter, currently trading near a 52-week high. Read the whole story on WWW.

Nordstrom, Inc. (JWN) has more than doubled the market's return over the past year. During the last 3 months, JWN saw even more bullish trading as shares nearly tripled the performance of the major averages. Analysts are also bullish, lifting the full-year Zacks Consensus Estimate from $1.57 per share to $1.65 over the past month. Read the whole story on JWN.

Coach, Inc. (COH) recently reported fiscal first quarter results. Earnings per share of 44 cents surpassed the Zacks Consensus Estimate by 13%. The company has delivered an average upside earnings surprise of 5% over the past 4 consecutive quarters. Read the whole story on COH. Zacks Investment Research

Chicago, IL – October 19, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Cognizant (CTSH), UBS AG (UBS), Infosys Technologies Ltd (INFY), Repsol YPF S.A. (REP) and Eni S.p.A. (E).

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Here are highlights from Friday’s AnalystBlog:

Cognizant Buys UBS ISC

Cognizant (CTSH) recently announced a definitive agreement to acquire UBS India Service Centre Private Limited for about $75 million. Based in India, UBS ISC is a captive service provider to UBS AG (UBS) and currently employs 2,000 associates.

Headquartered in Zurich and Basel, Switzerland, UBS AG is a global firm providing services to private, corporate and institutional clients. New Jersey-based Cognizant is a leading provider of consulting, technology and business process outsourcing (BPO) services.

The transaction is expected to close by the end of 2009. As part of the transaction, UBS and Cognizant have entered into a multi-year service agreement under which Cognizant will provide a range of business process outsourcing (BPO), knowledge process outsourcing (KPO), IT, and remote infrastructure management services to UBS divisions around the globe. Cognizant aims to help these divisions to reduce time-to-market, expand service delivery, and improve productivity, operational efficiency and quality.

UBS is a leader in wealth management, investment banking, asset management, research and remote IT infrastructure management. Management at Cognizant believes that this acquisition will help Cognizant strengthen its business and knowledge process capabilities, deepen its financial services domain knowledge, and improve its capabilities to provide integrated services across consulting, technology, and outsourcing.

Cognizant continues to outperform its peers and remains a leader in IT services. Compared to its competitors Tata Consultancy Services Ltd and Infosys Technologies Ltd (INFY), CTSH is setting a more robust tone going forward.

Repsol Confirms Gas in Venezuela

Following the test on recently found gas resource in the shallow waters of the Gulf of Venezuela, Repsol YPF S.A. (REP) confirmed reserves of between 5.6 trillion and 7.8 trillion cubic feet of gas. With an estimated area of 33 square kilometers, it is the country’s largest discovery.

Repsol (32.5% interest) partners with Italy's Eni S.p.A. (E – 32.5%) and Venezuela's state-owned oil company Petroleos de Venezuela SA (35%) for future production on this resource.

While Venezuela aims to increase natural gas output to overcome the current deficit, Repsol wants to boost oil and gas production through new discoveries off the coasts of Brazil and Venezuela after four years of declining output.

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First, a little background. The traditional tool of monetary policy is an open market purchase, in which the Fed purchased U.S. Treasury securities that had previously been held by someone in the private sector. The Fed would pay for those securities by crediting deposits in an account that the selling bank had with the Federal Reserve. These reserve deposits of banks represent claims that the bank could use, if it wished, to withdraw green currency from the Federal Reserve. The volume of reserve deposits historically was extremely important in determining the interest rate at which banks would lend the deposits to one another overnight. The traditional understanding of monetary policy was that the Fed would use open market purchases to achieve its desired objectives for the overnight interest rate and the money supply.

If the Fed wished to implement a purely temporary increase in the volume of reserve deposits, historically the tool of choice was a repurchase agreement, in which the Fed would buy a particular security with a promise to return it at a specified future date. The purchase was again implemented by creation of reserve deposits, and when the security was returned, those deposits came back into the Fed.

The Fed began to see a new potential use for these repos after the initial banking difficulties in August 2007. Although repos were traditionally used as a device for temporarily injecting reserves, their structure amounts to a collateralized loan from the Fed to the counterparty. The Fed's objective subsequent to August 2007 was to increase the volume of its lending and support the market for certain securities that it could accept as collateral for repos. Thus the Fed utilized an expansion of repurchase agreements as one of the initial tools for responding to the crisis, simply rolling them over to create a de facto expanded lending facility.

The graph below tracks the various assets held by the Federal Reserve since the beginning of 2007. The height of the graph represents the total asset holdings at the end of each week, with the colors indicating the contribution of each category. Repos are represented by the turquoise band. This traditionally had been small and highly variable, but grew significantly in the early phases of the financial crisis. Later the Fed came to use direct loans through its Term Auction Facility in preference to repos. Since January, the Fed has been directly buying up mortgage backed securities and agency debt in the way it used to purchase Treasury securities.

Figure 1. Factors supplying reserve funds, in billions of dollars, seasonally unadjusted, from Jan 1, 2007 to September 23, 2009. Wednesday values, from Federal Reserve H41 release. Agency: federal agency debt securities held outright; swaps: central bank liquidity swaps; Maiden 1: net portfolio holdings of Maiden Lane LLC; MMIFL: net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility; MBS: mortgage-backed securities held outright; CPLF: net portfolio holdings of LLCs funded through the Commercial Paper Funding Facility; TALF: loans extended through Term Asset-Backed Securities Loan Facility; AIG: sum of credit extended to American International Group, Inc. plus net portfolio holdings of Maiden Lane II and III; ABCP: loans extended to Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; PDCF: loans extended to primary dealer and other broker-dealer credit; discount: sum of primary credit, secondary credit, and seasonal credit; TAC: term auction credit; RP: repurchase agreements; misc: sum of float, gold stock, special drawing rights certificate account, and Treasury currency outstanding; other FR: Other Federal Reserve assets; treasuries: U.S. Treasury securities held outright.

A separate question is what happens to all the reserve deposits created through this process. The Fed has never wanted to see the huge volume of reserves it created end up as currency held by the public, for fear this would be inflationary. It has relied on several devices to keep that from happening. One was use of the Treasury's account with the Fed, another traditional feature of Fed operations that ballooned as it became adapted to new purposes. The Fed asked the Treasury to borrow funds that it simply left in deposit in its account with the Fed. These idle reserves held by the Treasury absorbed some of the vast increase in new reserves created by the Fed.

A more important tool was that the Fed started paying interest on reserves in October 2008, and by November had increased that rate to the target fed funds rate itself. This created a very strong incentive for banks to simply hold reserves idle at the end of each day rather than lend them out on the overnight fed funds market. In effect, by paying interest on reserves, the Fed is borrowing directly from banks and using the proceeds for the various asset expansions detailed above.

The graph below shows the Fed's liabilities at the end of each week. The height of the graph is, by definition, exactly equal to the height of the previous graph at every date. The first graph tracks what assets the Fed acquired with its operations, while the second graph shows where the funds it created ended up. The surge in the Treasury account (in yellow) and excess reserves of member banks (green) explain why the huge expansion in the Fed's balance sheet has not translated so far into a massive increase in the quantity of currency held by the public (blue).

Figure 2. Factors absorbing reserve funds, in billions of dollars, seasonally unadjusted, from Jan 1, 2007 to September 23, 2009. Wednesday values, from Federal Reserve H41 release. Treasury: sum of U.S. Treasury general and supplementary funding accounts; reserves: reserve balances with Federal Reserve Banks; misc: sum of Treasury cash holdings, foreign official accounts, and other deposits; other: other liabilities and capital; service: sum of required clearing balance and adjustments to compensate for float; reverse RP: reverse repurchase agreements; Currency: currency in circulation.

The question under discussion at the moment is the extent to which the Fed could continue to rely on these two devices-- Treasury borrowing on its behalf and banks' willingness to simply hold the ballooning reserves-- to contain the monetary consequences of its expansion. The traditional political gamesmanship over the debt ceiling could well induce the Treasury to want to discontinue its facilitation of the expansion of the Fed's balance sheet, in which case the Fed must either reduce some of its lending or count on banks to hold even more excess reserves. Some in the Fed are assuming that they could always ensure the latter outcome, if needed, by raising the interest rate the Fed pays on reserves. But clearly the Fed has no desire at the moment to raise interest rates, so it's difficult for me to imagine them taking that step any time soon.

Where else could the Fed get the funds? Fed Chairman Ben Bernanke described his contingency thinking last July:

the Federal Reserve could drain bank reserves and reduce the excess liquidity at other institutions by arranging large-scale reverse repurchase agreements with financial market participants, including banks, government-sponsored enterprises and other institutions. Reverse repurchase agreements involve the sale by the Fed of securities from its portfolio with an agreement to buy the securities back at a slightly higher price at a later date.

Just as the Fed converted the use of repos, which had historically been used on a small scale to temporarily add reserves, into a much larger operation with which it could lend broadly on a long-term basis, it is now contemplating using the reverse repo, which had historically been used on a small scale to temporarily drain reserves, into a much larger operation with which it could borrow broadly on a long-term basis. Thus we saw the following report from Bloomberg last week:

The Federal Reserve has started talks with bond dealers about withdrawing the unprecedented amount of cash injected into the financial system the last two years, according to people with knowledge of the discussions.

Central bank officials are discussing plans to use so-called reverse repurchase agreements to drain some of the $1 trillion they pumped into the economy, said the people, who declined to be identified because the talks are private. That's where the Fed sells securities to its 18 primary dealers for a specific period, temporarily decreasing the amount of money available in the banking system.

There's no sense that policy makers intend to withdraw funds anytime soon, said the people. The central bank's challenge is to decrease the cash without stunting the economy's recovery and before it sparks inflation. Fed Chairman Ben S. Bernanke said in a July Wall Street Journal opinion article that reverse repos are one tool to accomplish that goal without raising interest rates.

"One thing the Fed has to figure out is if they can launch pilot programs without spooking the market and creating the perception that they are about to tighten," said Louis Crandall, chief economist at Wrightson ICAP LLC, a Jersey City, New Jersey-based research firm that specializes in government finance. "They are discussing things like accounting issues, and updating the governing documents to the volume of reverse repos the dealer community could absorb."

Is this a feasible interim plan for handling the liability side without increasing either the money supply or interest rates? In a mechanical sense I believe the answer is yes. But the nature of inflationary pressures that we should be watching at the moment would arise from a depreciation of the dollar relative to other currencies and increase in the dollar price of internationally traded commodities. A modest move toward a weaker dollar and slightly higher inflation would be welcome. But the concern in my mind is whether a flight from the dollar could become more precipitous and destabilizing. It may not be the most likely scenario, but it is one for which I hope there has been some contingency planning.

And if the Treasury and the Fed think they could prevent that simply by borrowing even more without raising interest rates, they are mistaken.

FirstEnergy had purchased the partially complete plant from Calpine Corp. (CPN) in January 2008. The plant includes two natural gas combined-cycle combustion turbines and a steam turbine with 544 MW of load-following capacity and 163 MW of peaking capacity. With the revised construction schedule in place, FirstEnergy expects to spend around $200 million to complete the plant.

Ohio-based FirstEnergy is a diversified energy company engaged in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. It controls over 14,000 megawatts of generation capacity and serves more than 4.5 million customers in Ohio, Pennsylvania and New Jersey.

FirstEnergy remains focused on maintaining a strong balance sheet and improving operational efficiency. These have resulted in consistent operating performance in recent quarters despite slowing economic conditions.

Going forward, the shift of FirstEnergy’s subsidiaries to market based rates in 2011 will drive strong earnings and cash flow. However, these positives are effectively priced in its current share price. Hence, we maintain our Neutral recommendation for the company.

As part of the agreement, Phase Forward and Covance also entered into a multiyear marketing agreement. Management expects that this acquisition will strengthen its Interactive Response Technology solutions. 

Earlier, the company reported second quarter results, which beat analysts’ expectations and trimmed its outlook for 2009. Management stated that it expects revenues between $214.5 and $217.5 million. On a non-GAAP basis, the company projects EPS between 47 cents and 50 cents, down from the average forecast of 54 cents and its prior guidance of 51 cents to 54 cents, primarily due to acquisition related costs of 4 cents to 5 cents.

Phase Forward is a leading vendor in the market for clinical trial management systems (CTMS) and electronic data capture (EDC) for clinical trials. The company provides software and services to pharmaceutical, biotechnology, medical device and other research-related companies and institutions. EDC utilization in the clinical trial process is currently under-penetrated and we believe that, at some point in the next decade, it will reach complete market saturation. Within that framework, Phase Forward is a best-in-class vendor of EDC and CTMS solutions to product developers.

We believe increasing adoption of EDC will benefit Phase Forward, and that the company's product breadth could allow it to gain market share, allowing it to grow at above market rates, leading to positive revenue and earnings surprise and revisions.

We maintain a Neutral recommendation on the shares of Wells Fargo.

Shanghai's main index jumped 126 points, or 4.5%, to 2,911.58, while Japan's Nikkei 225 stock average climbed 179.41 points, or 1.8%, to 10,383.41.  Hong Kong's Hang Seng rose 374.63, or 2%, to 20,336.36.  South Korea’s Kospi advanced 2% to 1,576.39.

Stock futures pointed to a higher open on Wall Street Thursday.  Dow Jones industrial average futures rose 24, or 0.3%, to 9,300. Standard & Poor's 500 index futures edged up 3.70, or 0.4%, to 1,000.80, while Nasdaq 100 index futures rose 3.50, or 0.2%, to 1,602.25.

On Wednesday, the unexpected drop in crude inventories helped U.S. stocks wipe off early losses and finish the day with gains of less than 1% as investors looking for reassuring sings picked up oil and other commodity stocks.  Rumors that the Obama Administration was considering a second stimulus package also helped sentiments on the Street yesterday.  However, the rumors were later dismissed, with White House spokesman Gibbs noting, "There is no imminent economic announcement."

The 30-stock Dow Jones industrial average added 61 points, or 0.7%, to close at 9,279.16.  The NASDAQ added 13.32 points, or 0.7% for a close at 1,969.24, and the S&P500 ended 6 points higher at 996, up 0.7%.  Volume remained light with only 988 million shares trading on the NYSE and advancing shares ahead of decliners by a 3-to-2 margin.

On the earnings front, the picture was mixed as Hewlett-Packard (NYSE:HPQ), Deere (NYSE:DE) and PetSmart (NASDAQ:PETM) reported earnings that beat expectations, but outlook from these companies disappointed.  Some retailers, though, were optimistic, with BJ's Wholesale (NYSE:BJ) and Limited (NYSE:LTD) offering improved yearly outlook.

Among S&P500 industry sectors, oil and gas shares advanced 1.9% and were the leading gainers.  DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) moved higher, up 1.8% and 2.3%, respectively.  Commodity-related issues were not far behind, with basic material shares up 0.9%, following the broad-based gain in commodities. Freeport-McMoRan (NYSE:FCX) shares surged 2.7%.  However, Alcoa (NYSE:AA) led the decliners on the DJIA after Goldman Sachs (NYSE:GS) downgraded the stock, citing Alcoa's (NYSE:AA) recent appreciation and advised rolling positions into Freeport-McMoRan (NYSE:FCX), which is on its Conviction Buy List.

Health care issues advanced 1.3%, as Merck's (NYSE:MRK) 2.5% advance led DJIA component gains. A New Jersey court upheld the firm's patent for asthma drug Singulair, and ruled against Teva Pharmaceuticals (NASDAQ:TEVA).

Despite the day's reported increase in weekly mortgage applications, financial shares failed to gain in the market advance, and eased 0.03%. News of last week's rise in mortgage applications on increased refinancing requests did not have an impact on financial shares.  Bank of America (NYSE:BAC) shares dropped 0.9% and JP Morgan (NYSE:JPM) eased 0.7%.

Retailers scheduled to report include: Barnes and Noble (NYSE:BKS), GameStop (NYSE:GME), HJ Heinz (NYSE:HNZ), Hormel Foods (NYSE:HRL), Ross Stores (NASDAQ:ROST), Sears Holdings (NASDAQ:SHLD), and Gap (NYSE:GPS).

Chicago, IL – August 13, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Schering-Plough Corp. (SGP), Caraco Pharmaceutical Laboratories Ltd. (CPD), Dr. Reddy's Laboratories Inc. (RDY), GeoPharma Inc. (GORX) and Mylan Pharmaceuticals Inc. (MYL).

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Here are highlights from Wednesday’s Analyst Blog:

Schering-Plough Settles Lawsuits

Yesterday, Schering-Plough Corp. (SGP) said it has signed an agreement with Orchid Chemicals & Pharmaceuticals Ltd. and Orgenus Pharma Inc., which sought to make generic versions of its allergy drug Clarinex.

This signals the end of all pending litigations that Schering filed against several generic drug manufacturing companies in the US District Court of New Jersey since 2006. These companies wanted to market solid oral doses of the drug, desloratadine, in the U.S. as generic brands before the expiration of certain Schering patents.

Pursuant to the agreement, Orchid received rights to launch a generic version of the Clarinex brand Reditabs in the U.S. on Jan. 1, 2012 and Clarinex brand 5 milligram tablets on July 1 of that year. Schering holds various patents related to Clarinex till 2022.

Schering has previously resolved similar disputes with Caraco Pharmaceutical Laboratories Ltd. (CPD), Dr. Reddy's Laboratories Inc. (RDY), GeoPharma Inc. (GORX), Mylan Pharmaceuticals Inc. (MYL), among others.

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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.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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The EPS variations reflect the year-over-year differences, where Con Edison of New York benefited from 28 cents per share as higher rates authorized higher recovery of costs. This was partially offset by 6 cents from higher operations and maintenance expense, 12 cents from depreciation and 5 cents from interest expense, and 1 cent from dilutive stock issuance. The net effect was a 4-cent spike in EPS year over year while Orange and Rockland utilities remained steady.
 
The real variation in EPS year over year came from Competitive energy businesses where EPS gap got wider due to absence of 99 cents from discontinued operations, 50 cents from gain on the sale of generation projects, 4 cents from net mark-to-market effects. This was compensated to a small extent by 2 cents higher operating earnings per share.
 
The bottom-line results also reflect the dilutive effect of a higher weighted average number of common shares outstanding of 275.3 million, compared to 273.5 million shares in the prior-year quarter.
 
On the revenue front, Consolidated Edison witnessed a 9.7% fall year over year to $2.8 billion. Although electricity revenues held firm, the downside came from all the other segments – gas, stream and non-utility.

New York City-based Consolidated Edison is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. Consolidated Edison’s regulated businesses operate through two subsidiaries — Consolidated Edison Company of New York (Con Edison of New York) and Orange and Rockland Utilities (O&R). 
 
Con Edison of New York is a regulated utility that provides electricity to roughly 3.3 million customers, natural gas to 1.1 million customers, and steam services to about 1,850 customers, primarily in New York City and Westchester County. O&R serves nearly 400,000 electric and gas customers in southeastern New York State, northern New Jersey, and northeastern Pennsylvania.
 
Consolidated Edison’s future growth will be largely dependent on rate increases of its utility subsidiaries. However, on account of uncertain outcome from the pending regulatory cases we maintain our Neutral recommendation on Consolidated Edison.

Headquartered in Teaneck, New Jersey, Cognizant is a leading provider of information technology, consulting and business process outsourcing services for Fortune 1000 customers.

GAAP operating margin came in at 19.5% compared to 17.5% in the year-ago quarter. Excluding stock based compensation expense of $8.4 million and stock-based Indian fringe benefit tax expense of $1.3 million, non-GAAP operating margin was 20.8%, above the company's targeted range of 19% -20%.

GAAP EPS came in at $0.47 compared to $0.35 in the previous quarter. Non-GAAP EPS (excluding stock based compensation and stock-based Indian fringe benefit tax expense) came in at $0.50 easily beating the Zacks consensus of $0.37.

Based on a strong first half, Cognizant upgraded its guidance for 2009. Though the management remains cautions about the macroeconomic environment, visibility and confidence in the demand environment have strengthened over the past two months.

Nevertheless, demand for global IT and business services have stabilized with clients moving forward on their scheduled projects, especially those that help streamline their businesses and reduce operational costs. However, management is not expecting any surge in growth or a strong recovery in demand this year.

Management now expects 2009 revenue to grow by at least 11.5% to $3.14 billion, up from the previous guidance of 10%. Non-GAAP EPS is projected at $1.80.

For fiscal third quarter, Cognizant expects revenue of at least $800 million. Non-GAAP EPS is projected at $0.44.

Compared to its competitors, Cognizant is setting a more robust tone going forward. Earlier, peers like Tata Consultancy Services Ltd. and Infosys Technologies Ltd. (INFY) posted strong quarterly results but maintained a cautious outlook. Infosys raised its annual guidance marginally and saw a recovery in IT spending only by mid-2010.

Cognizant continues to outperform its peers and remains a leader in IT services. The stock has gained almost 70% in the past six months. We maintain our Hold on Cognizant.

With a diverse portfolio of Class A office and industrial/flex properties, Mack-Cali is a leading real estate investment trust (REIT) in the US. As of Mar 31, 2009, its portfolio included 294 properties, spanning 33.8 million square feet with over 2,100 tenants.

Strategically, the company concentrates on a few select high-barrier geographic markets and derives most of its annualized base rents from New Jersey (NJ). Its major markets are Newark, NJ (20.0% of annualized base rents as of the first quarter of 2009); Jersey City, NJ (19.6%); Westchester Rockland, NY (15.6%), Bergen-Passaic, NJ (15.2%), and Philadelphia, NJ (9.2%).

While reaffirming Mack-Cali's credit rating, Fitch considered its strong liquidity, adequate debt service coverage, manageable debt maturity schedule, and ability to access capital from varied sources. At quarter end, debt to market cap was 58.1%, while interest coverage ratio was 3.1x and fixed charge coverage ratio was 2.7x.

In order to conserve cash, the company has drastically cut its dividend from 64 cents per share to 45 cents. With the dividend cut, Mack-Cali anticipates saving approximately $62 million on an annualized basis.

The company has manageable near-term debt maturities with only $6.9 million of unsecured debt maturing in 2009 and about $340.3 million maturing in 2010. Mack-Cali currently has $410 million available on its $750 million line of credit, and $60 million cash in hand.

Subsequent to the end of the quarter, the company issued 11.5 million common shares at $25 each, raising net proceeds of $275 million. The bulk of the proceeds was utilized to repay debt and increase liquidity. With the increased liquidity, the company is now in a position to take advantage of strategic acquisition and development opportunities.

While the company's valuation at current price levels is attractive, we see no near-term growth catalyst. The company's office markets are weakening, and earnings will be flat in 2009. In general, we would stay away from most suburban office REITs in the current economic environment. We reiterate our Sell rating of Mack-Cali.

Recently, on July 2, 2009, the company announced that it would lay off 1,400 employees or about 3% of its headcount this month at its publishing division. Gannett announced that each of its markets will complete its own downsizing plan depending on local conditions.

On July 9, 2009, the Courier-Journal newspaper operating in the Louisville market laid off 44 employees, or 7% of its work force, as part of the company’s downsizing plan. Earlier, 51 employees were laid off in December 2008. The Arizona Republic newspaper operating in Phoenix lowered its headcount by 100.

The company also started executing its plans to eliminate 106 full-time and 19 part-time positions at its six New Jersey newspapers because of the depressed economy. Last year in December, the company reduced more than 200 positions at its New Jersey newspapers. The Cincinnati Enquirer, another newspaper operating in Cincinnati, announced a layoff of 101 employees.

Like Gannett Co., other newspaper companies like Washington Post Company (WPO), E.W. Scripps Company (SSP), McClatchy Company (MNI), Journal Communications (JRN), News Corporation Limited (NWS) and The New York Times Company (NYT) are all struggling to survive in the turbulent economy. The overall industry outlook appears gloomy with no sign of improvement near term as advertising demand worsens and readers migrate to the Internet and alternative media.

The Zacks Rank for GCI stock is #4 (Sell). Yesterday the stock closed at $3.19.

The drug candidate, betrixaban, is currently undergoing phase II studies. Merck has agreed to undertake all costs relating to the development and commercialization of the drug. According to the American Heart Association, about 2.2 million Americans suffer from atrial fibrillation.

We believe the deal reinforces Merck’s already established pipeline which includes many cardiovascular drugs. The New Jersey-based company has a significant joint venture with another large pharmaceutical player Schering-Plough (SGP) for cardiovascular drugs Zetia and Vytorin.

However, we feel that this deal is a huge positive to Portola as it enables the California-based firm to be associated with a pharmaceutical major and innovator in cardiovascular medicine. The deal also strengthens its balance sheet substantially.

Merck’s cardiology candidate, Vernakalant, was in-licensed from Cardiome Pharma (CRME) in April. The candidate is being developed for atrial fibrillation in both oral and IV forms. The oral form is in phase II testing. An NDA for the IV form met with an approvable letter in August 2008 despite receiving an approval recommendation from an FDA advisory board.

Cholesterol drugs drag Merck down

On the same day, Merck’s shares fell nearly a 4% following the news from the HALTS study that compared its cholesterol drug Zetia with Abbott Laboratories' (ABT) Niaspan. The study, which was funded by Abbott, was stopped based on results of a pre-specified, blinded interim analysis and not due to safety concerns.

However, it gave rise to speculation that Zetia performed badly in comparison with Niaspan in the clinical trial. As such, we maintain a Hold recommendation on Merck shares.

Wholesale Inventories are scheduled for release at 10:00 AM EST today, with May figures expected to decrease by 1% after declining by 1.4% in April to $405.4 billion.  Wholesale Sales will also be released, which is a precursor to Retail Sales which will be announced on Tuesday.

Upcoming Economic Releases
Trade Balance (07/10 at 8:30 AM EST)
Treasury Budget (07/13 at 2:00 PM EST)
Retail Sales (07/14 at 8:30 AM EST)
PPI (07/14 at 8:30 AM EST)

St. Jude Medical (STJ) recently announced that two out of its 12 manufacturing facilities are presently under the FDA's (Food and Drug Administration) scrutiny as their manufacturing practices were not in conformity with the Current Good Manufacturing Practice.

The FDA has already issued a warning letter to St. Jude to state that it would neither grant the company's requests for export certificates to foreign countries, nor clear any pre-market approval applications for its class III devices until the violation is rectified.

The two facilities identified are Plano, Texas and Hackettstown, New Jersey. The company has already provided written responses to the FDA detailing proposed corrective actions at these facilities. The company needs to rectify the manufacturing practices faster to protect its top line.

St. Jude Medical is a leading medical device manufacturer that designs, manufactures and distributes medical devices to treat cardiovascular and neurological conditions. The company operates through four business segments: Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF) and Neuromodulation (Neuro).

In the CRM segment (ICDs and pacemakers), the company is the second-largest player in the market after Medtronic (MDT) but ahead of Boston Scientific (BSX). CRM is the company's largest segment in terms of revenue. In the Neuro segment, St. Jude holds the #2 market position behind Medtronic.

St. Jude resorted to several fund-raising activities in the past few months. Last December, the company borrowed $500 million under its existing $1 billion credit facility. It also entered into a three-year agreement for $360 million with a consortium of banks in Japan and issued $88 million of three-year notes later.

In January, the company borrowed an additional $180 million under this agreement. The company used these amounts to fund acquisitions and repay its $1.2 billion in convertible debentures. The borrowings will increase its credit risk if St. Jude does not properly utilize these funds.

St. Jude remains relatively insulated from the recent economic fallout as a result of its life-sustaining product portfolio. In our latest report, we have assumed that the stock should trade at a 25% premium to the comparables' mean P/E/G multiple. Based on this, we reiterate `Buy' rating for this stock. We think investors stand to benefit by adding this stock to their portfolio.

STATES WITH PROJECTED FY2010 BUDGET GAPS
State	FY2010 pre-budget	FY2010 mid-year gap	FY2010 Total	FY2010 Total % of Budget
Alabama	$1.2 billion	0	$1.2 billion	16.70%
Alaska	$1.3 billion	0	$1.3 billion	30.00%
Arizona	$4.0 billion	0	$4.0 billion	41.10%
Arkansas	$146 million	0	$146 million	3.20%
California*	$34.2 billion	$19.5 billion	$53.7 billion	58.20%
Colorado	$1.0 billion	$384 million	$1.4 billion	18.60%
Connecticut	$4.1 billion	0	$4.1 billion	23.20%
Delaware	$557 million	0	$557 million	17.60%
District of Columbia	$650 million	$150 million	$800 million	12.70%
Florida	$5.9 billion	0	$5.9 billion	22.80%
Georgia	$3.1 billion	$750 million	$3.9 billion	22.30%
Hawaii	$682 million	$297 million	$978 million	19.10%
Idaho	$411 million	0	$411 million	16.40%
Illinois	$9.2 billion	0	$9.2 billion	33.00%
Indiana	$1.1 billion	0	$1.1 billion	7.50%
Iowa	$779 million	0	$779 million	13.20%
Kansas	$1.4 billion	Yes, DK size	$1.4 billion	22.60%
Kentucky	0	$1.1 billion	$1.1 billion	11.30%
Louisiana	$1.8 billion	0	$1.8 billion	21.60%
Maine	$640 million	0	$640 million	21.40%
Maryland	$1.9 billion	Yes, DK size	$1.9 billion	13.60%
Massachusetts	$5.0 billion	0	$5.0 billion	17.90%
Michigan	$2.4 billion	0	$2.4 billion	12.00%
Minnesota	$3.2 billion	0	$3.2 billion	21.00%
Mississippi	$480 million	0	$480 million	9.60%
Missouri	$923 million	0	$923 million	10.30%
Nebraska	$150 million	0	$150 million	4.30%
Nevada	$1.2 billion	0	$1.2 billion	37.80%
New Hampshire	$250 million	0	$250 million	16.20%
New Jersey	$8.8 billion	0	$8.8 billion	29.90%
New Mexico	$345 million	0	$345 million	6.30%
New York	$17.9 billion	0	$17.9 billion	32.30%
North Carolina	$4.6 billion	0	$4.6 billion	21.90%
Ohio	$3.3 billion	0	$3.3 billion	12.30%
Oklahoma	$600 million	0	$600 million	10.50%
Oregon*	0	0	0	0.00%
Pennsylvania	$4.8 billion	0	$4.8 billion	18.00%
Rhode Island	$590 million	0	$590 million	19.20%
South Carolina	$725 million	0	$725 million	12.50%
South Dakota	$32 million	0	$32 million	2.90%
Tennessee	$1.0 billion	0	$1.0 billion	9.70%
Texas	$3.5 billion	0	$3.5 billion	9.50%
Utah	$721 million	$279 million	$1.0 billion	19.80%
Vermont	$278 million	0	$278 million	24.80%
Virginia	$1.8 billion	Yes, DK size	$1.8 billion	10.90%
Washington	$3.4 billion	$195 million	$3.6 billion	23.30%
West Virginia	$200 million	0	$200 million	5.30%
Wisconsin	$3.2 billion	0	$3.2 billion	23.20%
Wyoming	0	$32 million	$32 million	1.70%
Total	$143.2 billion	$22.7 billion	$165.9 billion	24.40%

This will lead to very drastic cuts in state budgets. Access to medical care by the poor will likely be one of the first things to be cut.

Education budgets will also probably be pared. This could be decreased spending on new textbooks, which would not be good news for publishers like McGraw-Hill (MHP) and Scholastic (SCHL).

Another area that is likely to be hit is new equipment at the municipal level. For example, I would not expect Oshkosh (OSK) to have a very good year selling new fire engines and snow removal equipment to municipalities.

Layoffs of state and municipal workers will simply add to the already high and rising unemployment rate. In short, a big part of the federal stimulus spending is being offset by (legally mandated) anti-stimulus actions at the state level.

As the graph shows, state fiscal problems tend to persist well after the recession is officially over. Indeed the problem is usually worse in the second or third year since by then the "rainy day funds" have already been used up.

Following the last recession, states collectively had their worst year in 2004 with a shortfall of $80 billion (or less than half what they face for fiscal 2010), which was well after the recession officially ended. Thus 2011, and possibly even 2012, will be a very lean year at the state level as well.

Exelon Corp. (EXC) said it would record a $40 million severance charge in the second quarter for slashing 500 jobs as part of its restructuring initiative.

The nation's largest nuclear power company has been trying to cut costs in order to buffer itself against a slump in demand for utilities amid the ongoing recession. Its plans to lay off employees, freeze executive compensation and other incentives are expected to yield $350 million in annual savings. Exelon currently employs about 17,000 people.

While 12 analysts on average expect the Chicago, Illinois-based company to earn 98 cents per share in the second quarter, the most accurate estimate is pegged at 94 cents.

Exelon is still pursuing its hostile $5 billion bid for Princeton, New Jersey-based NRG Energy Inc.(NRG) that could create the biggest power producer in the country. NRG's annual general meeting next month is expected to decide the future of that deal.

Shares of Exelon were up more than 4% to $50.67 at noon on the New York Stock Exchange.

Watson Pharmaceuticals Inc. (WPI) agreed to buy privately held Arrow Group for $1.75 billion in a cash-and-stock offer on Wednesday that would expand its presence in more than 20 countries across the world.

Under terms of the deal, Arrow stakeholders will get $1.05 billion in cash, 16.9 million shares of Morristown, New Jersey-based Watson valued at $500 million, as well as an additional $200 million preferred shares redeemable three years after the transaction.

As patent expirations loom large for many large pharmaceutical companies, cash-rich drugmakers have been trying to bolster their pipeline through strategic acquisitions at attractive prices amid the recession. Watson said it will finance the deal with available cash and some debt.

Besides getting a larger foothold in the global market, the acquisition will also help Watson to sell a generic version of Pfizer Inc.'s (PFE) Lipitor once the blockbuster cholesterol drug loses exclusivity in 2011. As one of the fastest growing generic drugmaker in the world, Arrow reported revenue of $647 million in 2008.

With a big stake in biopharmaceutical firm Eden Biodesign, Arrow also brings with it the opportunity to explore the emerging market for generic biologics that Watson has been eying for sometime. The deal, expected to close later this year, will add to Watson's profit in 2010 and create a new company with annual revenue of over $3 billion.

Shares of Watson were up more than 5% to $30.30 at noon on the New York Stock Exchange after touching an intraday high of $30.68 earlier in the session.

Watson Pharmaceuticals Inc. (WPI) agreed to buy privately held Arrow Group for $1.75 billion in a cash-and-stock offer on Wednesday that would expand its presence in more than 20 countries across the world.

Under terms of the deal, Arrow stakeholders will get $1.05 billion in cash, 16.9 million shares of Morristown, New Jersey-based Watson valued at $500 million, as well as an additional $200 million preferred shares redeemable three years after the transaction.

As patent expirations loom large for many large pharmaceutical companies, cash-rich drugmakers have been trying to bolster their pipeline through strategic acquisitions at attractive prices amid the recession. Watson said it will finance the deal with available cash and some debt.

Besides getting a larger foothold in the global market, the acquisition will also help Watson to sell a generic version of Pfizer Inc.'s (PFE) Lipitor once the blockbuster cholesterol drug loses exclusivity in 2011. As one of the fastest growing generic drugmaker in the world, Arrow reported revenue of $647 million in 2008.

With a big stake in biopharmaceutical firm Eden Biodesign, Arrow also brings with it the opportunity to explore the emerging market for generic biologics that Watson has been eying for sometime. The deal, expected to close later this year, will add to Watson's profit in 2010 and create a new company with annual revenue of over $3 billion.

Shares of Watson were up more than 5% to $30.30 at noon on the New York Stock Exchange after touching an intraday high of $30.68 earlier in the session.

Company Description

Lincoln Educational is a leading and diversified for-profit provider of a career-oriented post-secondary education headquartered in West Orange, New Jersey. It offers recent high school graduates and working adults degree and diploma programs in four principal areas of study: automotive technology, allied health (which includes programs for medical administrative assistants, medical assistants, pharmacy technicians and massage therapists), skilled trades and business and information technology.

Record Revenue

When Lincoln reported first-quarter results on May 6 it included record revenue of $118.6 million. Revenue rose 41% on a year-over-year basis. New student starts grew by more than 42%, up from 35% in the same quarter of 2008.

Earnings per share came in at an astounding 22 cents per share, 11 times the same period one year ago. EPS also trounced the consensus estimate of 4 cents per share. This was the company's sixth consecutive surprise.

Guidance Projects Continued Growth

In the same announcement the company increased its full-year guidance. Revenues are expected to be $510 million, up 35% from 2008. Earnings per shares is expected to grow at least 60% to between $1.25 and $1.30.

Analysts' estimates are coming in at the higher end of the range for this year, averaging $1.29 which is 34 cents higher than prior to the revised guidance. The consensus estimate for 2010 is now averaging $1.56, up 43 cents since the earnings release.

These forecasts, if met, would yield growth rates of 66% for the current year and another 21% for 2010.

Good Value to Boot

Shares of LINC are trading at 19 times earnings, which is well below the industry average of 25 times. The forward P/E is an attractive 13 times earnings and the PEG ratio is just 0.8.

The Chart

LINC has been outperforming the S&P 500 by a significant margin over most of the past six months. Take a look at the chart below.

Zacks Investment Research