Chicago, IL – November 25, 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: Affiliated Computer Services Inc. (ACS), Xerox Corp. (XRX), Expedia Inc. (EXPE), Orbitz Worldwide (OWW) and Priceline.com (PCLN).

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Here are highlights from Tuesday’s Analyst Blog:

Settlement in Xerox-ACS Merger

Affiliated Computer Services Inc. (ACS) announced that the complaint filed by ACS shareholders regarding its merger with Xerox Corp. (XRX) has been resolved. The plaintiffs have temporarily withdrawn their motion for an injunction to block the deal.

The lawsuit was filed in October in Dallas County, Texas as Xerox was struggling to convince its shareholders to approve the deal.

The plaintiffs agreed to drop the lawsuit only if ACS’s Board of Directors received a better proposal than Xerox’s current bid and Xerox did not force ACS’s Chairman Darwin Deason to exercise his voting power in favor of the Xerox acquisition. The previous agreement called for Mr. Deason to cast half his votes in favor of the Xerox bid. He controls 44% of the votes at ACS.

Xerox has also decided not to force ACS to hold a shareholder meeting to vote on the Xerox transaction, and if requested by the Xerox’s shareholders ACS will terminate the Merger Agreement. Xerox also said that a pension fund has dropped a lawsuit over the purchase of ACS. However, a separate shareholder class action lawsuit is still pending in Delaware.

In September, Xerox agreed to acquire Affiliated in a cash and stock transaction valued at $6.4 billion ($63.11 per ACS share in cash and Xerox stock). Affiliated shareholders will receive $18.60 in cash and 4.935 shares of Xerox for each ACS share. Xerox will also assume $2 billion of ACS’s debt and issue $300 million of convertible preferred stock to ACS shareholders.

Downgrading Expedia to Neutral

We are downgrading shares of Expedia Inc. (EXPE) from Outperform to Neutral.

The company reported strong results in the last quarter, but continued to benefit from promotional inventories provided by its hotel partners. When results are stripped off the benefits of promotional activities, a softer demand environment could become evident.

We also do not expect the company to report better than seasonal sales growth in the current quarter.

The company has sacrificed booking fees this year, which is telling on the average daily rates (ADRs). Therefore, ADRs could be the metric to watch rather than room nights at this point of time.

We are also concerned about the incidence of transient occupancy taxes. Although municipalities and governments have decided that they will recover occupancy taxes from hotels if they lose out to online travel companies, we note that Expedia has already lost in Georgia and the company is slated to pay out $55 million to the City of San Francisco.

A fresh suit has now been filed by Florida, and for the first time the company has been charged under the Florida Deceptive and Unfair Trade Practices Act. Five Florida counties have decided to charge Expedia, as well as other online travel companies such as Orbitz Worldwide (OWW), Priceline.com (PCLN) and Travelocity for recovery of transient occupancy taxes. The company made a hefty provision in the June quarter, but we fear that this could be insufficient if the cases continue. Fines of this magnitude have the potential to develop into a constant drain on cash.

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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.

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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Company Description

Gap Inc. is a global specialty retailer that sells clothing, accessories and personal care products for men, women, children and babies under the Gap, Old Navy, Banana Republic, Piperlime and Athleta brands. The company operates stores in the United States, Canada, the United Kingdom, France, Ireland and Japan.

Gap also has franchise agreements with unaffiliated franchisees to operate Gap and Banana Republic stores in many other countries around the world. Under these agreements, third parties operate or will operate stores that sell apparel, purchased from Gap, under Gap's brand names.

Co-founder Dies After a Long and Heroic Battle with Cancer

The company recently announced that Donald G. Fisher, co-founder of Gap, died after a long and heroic battle with cancer. He was 81.

Donald Fisher opened his first Gap store 40 years ago last month. A life-long resident of San Francisco, he was also known for his commitment to philanthropic and civic activities. Along with his wife Doris, Mr. Fisher believed that opportunities existed for a retail company that could provide consumers with a variety of fit and style options. In 1969, the Fishers raised $63,000 to launch a single jeans and music store called The Gap (named for "the generation gap") in San Francisco.

"Today we lost a friend, a mentor and a great visionary," said Glenn Murphy, CEO and Chairman of the Board of Gap Inc. "Don and Doris took a simple idea and turned it into a brand recognized as a cultural icon throughout the world and changed the face of retail forever. "

Solid Back to School performance at Old Navy

Gap posted net sales of $1.12 billion for the month of August, a 2% dip from the year-prior total. Comparable store sales slipped by 3% year-over-year.

"During August, customers responded well to our denim collections at Gap and Old Navy," said Sabrina Simmons, chief financial officer of Gap Inc. "We were especially pleased by the progress at Old Navy and its strong back to school performance, which helped support total company merchandise margins significantly above last year."

Old Navy sales came in 4% above the previous year's total.

Bullish Forecasts

Analysts polled by Zacks are bullish on earnings. Current full-year estimates of $1.37 per share up 2 cents in just the past week. For the following year, the Zacks Consensus Estimate of $1.48 per share was also bumped up by 2 cents over the past week.

Gap boasts an impeccable record of exceeding earnings projections. Dating back to December 2004, the company topped the Zacks Consensus every time with the exception of 1 match.

A Strong Second Quarter Helped Push Shares Higher

In mid-August, the company reported second-quarter earnings 33 cents per share, beating the Zacks Consensus Estimate by 3% and outpacing last year's 32 cents.

Net sales of $3.25 billion came in below the previous year's $3.50 billion. Comparable store sales declined 10% year-over-year. Online sales, however, showed an increase of 17% from the year-prior.

"We're proud to deliver second quarter earnings per share above last year, especially during a challenging environment," said Glenn Murphy, chairman and chief executive officer of Gap Inc. "Building upon two years of work improving our economic model, we're now putting further emphasis on changing the trajectory of our top line performance. Our focus is to find the right balance between maintaining our cost discipline and making appropriate, targeted investments to gain back market share."

Shares, which are nearing a 52-week high, climbed higher after delivering a stellar second quarter, outperforming the market by about 10%. For the past year, GPS is more than 20% ahead of the market.

GPS Stacks Up Well Against Industry Numbers

Gap, a Zacks #1 Rank (Strong Buy), has a solid balance sheet, showing no debt. The company's return on equity of 21% nearly triples the industry average of 8%. Its net profit margin of 7% eclipses the industry average of 1%. Gap also offers an industry-leading dividend yield of 1.6%. Zacks Investment Research

The Pier Shops at Caesars is a 282,000 square feet shopping center in which Taubman owns a 77.5% stake. The company considers net operating income from the property to be insufficient to repay its $135 million non-recourse mortgage debt. Thus, it will write down book value of the asset by $106 million to $111 million, out of which Taubman has a share of about $100 million to $105 million.

Regency Square is an 820,000 square feet shopping center housing leading fashion retailers like Macy’s Inc. (M), J. C. Penney Co. Inc. (JCP) and Sears Holding Corp. (SHLD). Taubman anticipates cash flow from the property to be hurt by the decline in its net operating income and necessary capital expenditures. It is accordingly writing down book value of the asset by $55 million to $58 million to approximately $30 million.

Taubman owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. Retail shopping centers spanning over 400,000 square feet of gross leaseable area (GLA) are generally referred to as regional shopping centers, while those with GLA in excess of 800,000 square feet are called super-regional shopping centers. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.

Results showed that clinical advantages associated with the use of XIENCE V continued to increase compared to Boston Scientific's (BSX) Taxus Express2 Paclitaxel-Eluting Coronary Stent System.

At three years, XIENCE V demonstrated a reduction in the risk of major adverse cardiac events (9.1% for XIENCE V compared to 15.7% for Taxus). XIENCE V also demonstrated a reduction in the risk of Target Lesion Failure (8.3% for XIENCE V versus 14.4% for Taxus), a reduction in the risk of Target Vessel Failure (13.5% for XIENCE V compared to 19.2% for Taxus) and a reduction in the risk of heart attacks (3.7% for XIENCE V compared to 6.3% for Taxus).

These results were presented at the 2009 Transcatheter Cardiovascular Therapeutics (TCT) conference in San Francisco. The new data should support further uptake of the product, which has helped Abbott become a major player in the drug-eluting stent (DES) market.

XIENCE V has been taking significant domestic and international share from Taxus, Medtronic's (MDT) Endeavor, and Johnson & Johnson's (JNJ) Cypher (sirolimus-eluting system) drug-eluting stents.

Abbott is currently working on a next-generation drug-coated stent called XIENCE PRIME. PRIME is already available in Europe and other countries throughout Asia-Pacific and Latin America, and is currently in a large scale clinical program called SPIRIT PRIME in the U.S. If approved, PRIME could hit the U.S. market in the first half of 2012.

Abbott's Vascular Products segment should continue posting robust growth mainly due to the strong performance of XIENCE V. We have a Neutral rating on Abbott.

During the five-year term of the agreement, Tetra Tech will support pollution prevention and sustainable water infrastructure activities associated with the Clean Water Act, the Marine Protection and Sanctuaries Research Act and the Safe Drinking Water Act.

The company also received a $13.1 million contract from the Navy for a sanitary sewer system, storm drain removal and other services at Hunters Point Shipyard in San Francisco. This project is expected to be completed by March 2011.

Tetra Tech said that the dck/TtEC LLC was one of four contractors awarded a global multiple-award construction (GMAC) contract with the U.S. Navy. The indefinite delivery contract has a shared ceiling value of $900 million, with one base year and four option years. The dck/TtEC LLC combines Tetra Tech’s resources with those of dck worldwide, a global construction company. The GMAC includes design-build and design-bid-build projects at US Department of Defense installations worldwide.

Tetra Tech is a leading provider of consulting, engineering, program management, construction and technical services addressing resource management and infrastructure markets. The company supports government and commercial clients by providing innovative solutions focused on water, environment and energy. With more than 10,000 employees worldwide, Tetra Tech’s capabilities span the entire project life cycle. Its major competitors include Shaw Group Inc. (SHAW) and URS Corp. (URS).

We currently have a Neutral recommendation on the stock.

Chicago, IL – September 18, 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: Merck (MRK), Bristol-Myers Squibb (BMY), Gilead Sciences (GILD), GlaxoSmithKline (GSK) and Abbott Labs (ABT).

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Here are highlights from Thursday’s Analyst Blog:

Approval for Merck's Isentress

The European Union (EU) recently expanded the approval of Merck’s (MRK) Isentress (raltegravir) for the first line treatment of HIV patients. Earlier, it was approved for patients who had not responded to other treatment options. In the US, following a recent Food and Drug Administration (FDA) approval, Isentress can be used in combination therapy for previously untreated patients as well.

Isentress recorded worldwide sales of $172 million for the second quarter of 2009, an increase of 123% compared with the year-ago period. We believe the recent FDA and EU approval (for previously untreated patients) could increase the number of targeted patients considerably, leading to a significant rise in sales. We expect the drug to record more than $1 billion in revenues by 2011.

Recently, at the 49th Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) held at San Francisco, Merck presented data from a study comparing Isentress with Bristol-Myers Squibb’s (BMY) Sustiva (efavirenz) for 96 weeks in 563 previously untreated HIV patients. Patients who entered the study were required to have HIV viral loads greater than 5000 copies/mL.

The study found that treatment with Isentress resulted in similar virologic control as witnessed with patients treated with an efavirenz-based combination treatment. About 81% of the patients assigned to the raltegravir treatment arm had undetectable levels (below 50 copies/mL) of circulating HIV RNA compared to the 79% of patients treated with efavirenz.

According to the Centers for Disease Control and Prevention (CDC), in 2006 there were more than one million people in US living with HIV and AIDS. An estimated 33 million people are living with HIV and AIDS worldwide, and about 2.7 million new infections occurred worldwide in 2007. AIDS is one of the top causes of infectious disease-related mortality worldwide, responsible for approximately two million deaths in 2007 alone.

Gilead Sciences (GILD), Bristol-Myers Squibb, GlaxoSmithKline (GSK) and Abbott Labs (ABT) are the major players in this segment.

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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.

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.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

The company said the impairment charge would not impact its ownership interest in the project and it would continue to be the property manager and leasing agent of the asset.

In a separate development, Cousins announced a public offering of 32 million common shares and an underwriter option to purchase an additional 4.8 million shares. The company plans to use the proceeds to repay its debt under the revolving credit facility and for general corporate purposes. J. P. Morgan of JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Morgan Stanley (MS) are the joint book-running managers for the offering.

Cousins acquires, finances, develops, manages and leases office, retail and industrial properties throughout the U.S., including Atlanta, Charlotte, Austin, San Francisco, Los Angeles and Washington DC. The company also provides leasing and management services to third-party investors.

Market fundamentals are deteriorating for office and retail landlords throughout the country due to the continued economic downturn. With high market vacancies and no job growth, rental rate growth on new leases will also be non-existent for some time. Consequently, with no short-term growth indicators, we expect continued volatility in the sector.

The randomized, double-blind trial compared ceftaroline with ceftriaxone in hospitalized adult patients with moderate to severe CAP. Following both the trials, it was found that patients treated with ceftaroline demonstrated a better cure rate (84.3%) compared to those treated with ceftriaxone (77.7%). In addition, the overall microbiological response rate in the microbiologically evaluable (ME) population was 87% for ceftaroline and 81% for ceftriaxone, while in the microbiological modified intent-to-treat (MITT) population it was 84.8% for ceftaroline and 80.4% for ceftriaxone. 

Based on the positive result, Forest expects to file a New Drug Application (NDA) with the US Food and Drug Administration (FDA) for ceftaroline for the treatment of both cSSSI and CAP by year end.

Earlier, in August, Forest entered into a deal with AstraZeneca (AZN) for ceftaroline. The contract involves co-development and commercialization of the drug in all markets other than the U.S. , Canada and Japan . We believe the deal to be quite beneficial for Forest as the company will receive substantial funds from its partner through signing fee, royalties from sales and payments tied to certain specific sales milestones.

On approval, ceftaroline will have to face tough competition from several players especially from Pfizer’s (PFE) Zyvox and Wyeth’s (WYE) Tygacil. The latest drug to get FDA approval for the treatment of infection caused by gram-positive bacteria is Theravance’s (THRX) Vibativ. There are many pipeline candidates as well, including Johnson & Johnson’s (JNJ) ceftobiprole.

We are concerned about longer-term growth of Forest, especially towards the beginning of the next decade when Lexapro, which accounts for over half of the company’s top line, gets exposed to generic competition. That puts a lot of pressure on the pipeline to come through.

• Apple's (NASDAQ:AAPL) San Francisco event once again saw the shares move lower, this year off 1%, despite the welcome appearance of Jobs, and iPod price cuts and improvements.  An 8 GB iPod Nano will include built-in video and an FM radio; price cuts of as much as $120 were made.  This morning JP Morgan (NYSE:JPM) upped its rating on Apple to "outperform" from "market perform," with a $200 price target

• Texas Instruments (NYSE:TXN) raised its third quarter earnings and sales guidance, with third quarter guidance increased to 37 cents to 41 cents a share from prior range of 29 cents to 39 cents a share; revenues guidance was lifted to $2.73 billion to $2.87 billion from prior $2.5 billion to $2.8 billion, with estimates at $$2.68 billion

• Vivus (NASDAQ:VVUS) noted its experimental obesity drug showed dramatic results in two late-stage clinical trials

• Disney (NYSE:DIS) reported improvements in local ad markets with increased activity from automakers nationally, although still anticipating lower theme park hotel bookings for the September quarter

• Monsanto (NYSE:MON) said it continues to see 2009 results from continuing operations at the lower end of its prior guidance of $4.40-$4.50; the Street has expected $4.41. For 2010 the company expects $3.10-$3.30, off consensus estimates of $4.12

• Yahoo (NASDAQ:YHOO) shares were upgraded by Bank of America (NYSE:BAC) to "buy," with a price target hike to $19 from $17

• BP (NYSE:BP) shares were lowered to "neutral" by analysts at HSBC (NYSE:HBC). The company's Tiber Field, last week's "giant discovery" 9km beneath the Gulf seabed, is unofficially estimated to contain 500m-1 billion recoverable barrels of oil

• Talbots (NYSE:TLB) reported an adjusted fiscal second quarter loss of 33 cents a share, versus estimates of a 52 cents per share loss on revenues of $304.6 million, versus estimates of $309.34 million.  The firm said it sees third quarter losses of 24-30 cents a share, ex-items

• JP Morgan (NYSE:JPM) upgraded UPS (NYSE:UPS) to "overweight" from "neutral" and raised the price target on the firm to $70 from $57

• Goldman Sachs (NYSE:GS) downgraded DuPont (NYSE:DD) on valuation concerns with a price target of $32

• Goldman Sachs (NYSE:GS) upped Illinois Tool Works (NYSE:ITW) and added the firm to its Conviction Buy List with a $55 price target

• Palm (NASDAQ:PALM) cut prices on its Pre smartphone, introducing a cheaper and thinner model, "Pixi"

• Apple's (NASDAQ:AAPL) San Francisco event is expected to see a fresh iPod launch, new iTune offerings, an Apple TV tune-up, with hopes of a Steve Jobs appearance

Jacobs will provide airfield civil engineering, and mechanical and electrical engineering for MAG's building stock, including both airport facilities and non airport-related developments. Jacobs is the exclusive provider of these services.

The company also received a contract from the City and County of San Francisco, California, to provide construction management services for the San Francisco General Hospital and Trauma Center Rebuild Program.

The rebuild was approved by San Francisco voters in November 2008. They authorized the City and County to finance the project with $887.4 million general obligation bonds.

The San Francisco General Hospital and Trauma Center Rebuild Program will replace the existing hospital building with a facility that complies with the state's seismic safety requirements. San Francisco General Hospital and Trauma Center is the sole provider of trauma and psychiatric emergency services for the City and County of San Francisco. A comprehensive medical center, SFGH serves some 100,000 patients per year and provides 20 percent of the city's inpatient care.
 
Jacobs, with annual revenues exceeding $12 billion, is one of the world's largest and most diverse providers of technical, professional, and construction services. Its major competitors are Foster Wheeler AG (FWLT) and Fluor Corp. (FLR).

Chicago, IL – September 3, 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: Apple Inc. (AAPL), Palm (PALM), Nokia (NOK), Motorola (MOT) and Research in Motion (RIMM).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday’s Analyst Blog:

Apple's New iPod

Apple Inc. (AAPL) is expected to unveil a new line up of iPod portable music players for the holiday period when it will hold a special media event in San Francisco on Sept 9. Apple declined to name the products.

It is widely believed that Apple will use the event to announce major updates to the iPod Touch, the classic iPod and the iPod Nano. The upgrades could include adding a digital camera to the devices, while the iPod Touch could also be augmented with a video camera. No updates to iPod Shuffle are expected.

Apple is also expected to provide an update to the iTunes media management software at the event. Rumor has it that Steve Jobs may appear for the first time at the event after he returned to Apple from his temporary leave of absence.

Apple’s resurgence has been driven by the tremendous success of its iPod portable music and video players and iTunes online store. Apple unveiled the iPod nano in 2005, which was followed by the launch of iPod Touch in 2007. Apple’s iPod remains popular, as evident from the 6% increase in unit shipments to 54.8 million in fiscal 2008 compared to 2007.

However, growth in the digital music player market may slow down as the core market becomes saturated. Apple suffered declining year-over-year sales of its iPods in the first nine months of 2009 as demand fell due to global recession. The company could sell only 44.1 million iPods during the first nine months of 2009. iPod revenues were down 13.0%.

Apple faces significant competition from Palm (PALM), Nokia (NOK), Motorola (MOT) and Research in Motion (RIMM) in all areas of its business.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

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.

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.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

• AIG (NYSE:AIG) and its former CEO and CFO have reportedly agreed to terms of binding arbitration in settling claims from shareholders regarding lost investments due to financial restatements

• Apple (NASDAQ:AAPL) will host a September 9, music-themed media event in San Francisco, expected to include a new iPod line, with a Beatles' catalogue available on its iTunes store

• Sony (NYSE:SNE) will distribute Google's (NASDAQ:GOOG) Chrome browser on its Vaio PCs

• Media reports said Bank of America (NYSE:BAC) is planning to repay part of the $45 billion in government aid recovered from TARP, beginning with a $20 billion repayment.  The move would remove its status as a recipient of "exceptional aid," allowing certain government oversight measures to be lifted

• EBay (NASDAQ:EBAY) is expected to announce plans to sell its Skype Internet calling division to private investors.  The company has said it wants about $2 billion for the unit

• Wal-Mart (NYSE:WMT) began website sales of merchandise not carried in its stores in a revenue-sharing exchange similar to Amazon.com's (NASDAQ:AMZN)

• Citigroup (NYSE:C) said its sold $1.3 billion in credit-card assets to an undisclosed buyer.  Terms of the sale were also not revealed

• Credit Suisse cut its Nokia (NYSE:NOK) rating to "underperform" from "outperform," and removed the company from its focus list.  The firm also cut its estimate for 2010 by 28%. Credit Suisse expects Nokia to lose smart phone market share next year

• Robert W. Baird upped its price target for Wells Fargo (NYSE:WFC) to $33 from $30

The Bank of Canada-ECB conference papers are here. All the papers, as well as powerpoint files of the presenters and discussants, are available from the conference website; I've reproduced some of the abstracts below.

Order flows and the exchange rate disconnect puzzle

M. Evans (Georgetown University)

Discussant: P. Vitale (G. D'Annunzio University)

This paper was also presented at the NBER conference -- see below for the abstract and my discussion of the paper.

What does the yield curve tell us about exchange rate predictability?

Y. Chen (University of Washington), K. P. Tsang (Virginia Tech)

This paper uses information contained in the cross-country yield curves to test the asset pricing approach to exchange rate determination, which models the nominal exchange rate as the discounted present value of its expected future fundamentals. Since the term structure of interest rates embodies information about future economic activity such as GDP growth and inflation, we extract the Nelson-Siegel (1987) factors of relative level, slope, and curvature from cross-country yield differences to proxy expected movements in future exchange rate fundamentals. Using monthly data between 1985-2005 for the United Kingdom, Canada, Japan and the US, we show that the yield curve factors predict bilateral exchange rate movements and explain excess currency returns one month to two years ahead. They also outperform the random walk in forecasting short-term exchange rate returns out of sample. Our findings provide an intuitive explanation to the uncovered interest parity puzzle by relating excess currency returns to inflation and business cycle risk.

Discussant: R. Alquist (Bank of Canada)

I found this paper quite interesting as it links up, in an atheoretical/empirical fashion, with the findings Guy Meredith and I obtained -- namely that short term interest rate differentials mispredict exchange rate changes, but long term interest rate differentials do not.

On the unstable relationship between exchange rates and fundamentals

*P. Bacchetta (University of Lausanne), E. van Wincoop (University of Virginia)

It is well known from anecdotal, survey and econometric evidence that the relationship between the exchange rate and macro fundamentals is highly unstable. This could be explained when structural parameters are known and very volatile, neither of which seems plausible. Instead we argue that large and frequent variations in the relationship between the exchange rate and macro fundamentals naturally develop when structural parameters in the economy are unknown and change very slowly. We show that the reduced form relationship between exchange rates and fundamentals is driven not by the structural parameters themselves, but rather by expectations of these parameters. These expectations can be highly unstable as a result of perfectly rational "scapegoat" effects. This happens when parameters can potentially change much more in the long run than the short run. This generates substantial uncertainty about the level of parameters, even though monthly or annual changes are small. This mechanism can also be relevant in other contexts of forward looking variables and could explain the widespread evidence of parameter instability found in macroeconomic and financial data. Finally, we show that parameter instability has remarkably little effect on the volatility of exchange rates, the in-sample explanatory power of macro fundamentals and the ability to forecast out of sample.

Discussant: C. Engel (University of Wisconsin)

This paper is closely related to another paper by Bacchetta, Wincoop, and Beutler, discussed in this post from June.

What is driving exchange rates? New evidence from a panel of US dollar bilateral exchange rates

J. Cayen (Bank of Canada), D. Coletti (Bank of Canada), R. Lalonde (Bank of Canada), *P. Maier (Bank of Canada)

Discussant: H. Bouakez (HEC Montreal)

Common risk factors in currency markets

*H. Lustig (UCLA), N. Roussanov (University of Pennsylvania), A. Verdelhan (Boston University)

We identify a 'slope' factor in exchange rates. High interest rate currencies load more on this slope factor than low interest rate currencies. As a result, this factor can account for most of the cross-sectional variation in average excess returns between high and low interest rate currencies. A standard, no-arbitrage model of interest rates with two factors -- a country- specific factor and a global factor -- can replicate these findings, provided there is sufficient heterogeneity in exposure to the global risk factor. We show that our slope factor is global risk factor. By investing in high interest rate currencies and borrowing in low interest rate currencies, US investors load up on global risk, particularly during bad times.

Discussant: F. Fornari (European Central Bank)

Crash risk in currency markets

*E. Farhi (Harvard University), X. Gabaix (New York University), A. Verdelhan (Boston University)

Discussant: P. Della Corte (University of Warwick)

Dinner address: J. Murray (Bank of Canada)

Demand imbalances, exchange rate misalignment and monetary policy

Corsetti (European University Institute), L. Dedola (European Central Bank) S. Leduc (Federal Reserve Bank of San Francisco)

In standard open macro models with incomplete markets, monetary policy geared towards price stability may result in (rather than correcting) misalignments in important asset prices like the exchange rate, even when the latter only reflects fundamental-based valuation. We discuss instances in which optimal monetary policy redresses these inefficiencies, achieving significant welfare gains relative to price stability. These gains are obtained by leaning against an over- or under-valued exchange rate, associated with suboptimal cross-country demand and current account imbalances, consistent with flexible inflation targeting.

Discussant: J. Gali (Centre de Recerca en Economia Internacional)

I think this paper by Corsetti et al. is an important one, because it's one of the few papers I know that explicitly defines what real exchange rate misalignment is, in the context of a formal New Keynesian model. I think it, and the discussion by Jordi Gali, are required reading for anybody interested in thinking about equilibrium real exchange rates.

The dynamics of international trade invoicing

*L. Goldberg (Federal Reserve Bank of New York), C. Tille (Geneva Graduate Institute)

International trade transactions can be invoiced in the producer currency, in the destination currency, or in some third vehicle currency. This paper shows how an exporter's invoicing choice is affected by her market share, industry structure, the role of imported inputs, the hedging of macroeconomic shocks, and exchange rate regimes. We address a shortcoming in the existing literature by invoicing choices as the outcome of a bargaining game between exporting producers and their customers abroad. Using a new dataset of 45 million individual Canadian import transactions, we examine the roles of the various invoicing determinants, documenting the importance of each of these factors in the invoicing decisions of specific industry exporters, distinguishing between U.S. exporters and those from other countries.

Discussant: M. Devereux (University of British Columbia)

The predictive information content of external imbalances for exchange rate returns: How much is it worth?

*P. Della Corte (University of Warwick), L. Sarno (Cass Business School), G. Sestieri (European Central Bank)

Discussant: G. M. Milesi-Ferretti (International Monetary Fund)

Keynote speech: On Global Currencies

*J. Frankel (Harvard University)

I approach the state of global currency issues by identifying eight concepts that I see as having recently "peaked" and eight more that I see as currently rising in relevance. Those that I see as having already seen their best days are: the G-7, global savings glut, corners hypothesis, proliferating currency unions, inflation targeting (narrowly defined), exorbitant privilege, Bretton Woods II, and currency manipulation. Those that I see as receiving increased emphasis in the future are: the G-20, the IMF, SDR, credit cycle, reserves, intermediate exchange rate regimes, commodity currencies, and multiple international currency system.

I've discussed some of the points Frankel lays out in a previous post, including the idea that “global savings glut” is an idea that is over.

Policy panel discussion: Exchange rate behaviour and policy: Before, during and after the global economic crisis

Chairman: L. Papademos (European Central Bank)

M. Chinn (University of Wisconsin) [presentation]

C. Engel ( University of Wisconsin )

J. Murray (Bank of Canada)

The second meeting (organized by Fabio Ghironi, Boston College, and Nelson Mark, Notre Dame) devoted the Wednesday session to exchange rates:

Order Flows and the Exchange Rate Disconnect Puzzle

Martin Evans, Georgetown University and NBER

The aim of this paper is to establish the link between the high frequency dynamics of spot exchange rates and developments in the macroeconomy. To do so, I first present a theoretical model of exchange-rate determination that bridges the gap between existing microstructure and traditional models. The model examines how dispersed microeconomic information known to individual agents outside the foreign exchange market is aggregated and transmitted to dealers via transaction flows (i.e., order flow); and how the information is then embedded in the spot exchange rate. I then report empirical evidence that strongly supports the presence of the link between the macroeconomy, order flow, and high frequency exchange rate returns implied by the model. In fact, my empirical results indicate that between 20 and 30 percent of the variance in excess currency returns over one- and two-month horizons can be linked back to developments in the macroeconomy. This level of explanatory power is an order of magnitude higher than that found in traditional models -- even the newly developed monetary models incorporating central banks reaction functions. Moreover, it provides a straightforward solution to the exchange-rate disconnect puzzle. Namely, the high frequency behavior of spot exchange rates reflects the flow of new information reaching dealers concerning the slowly evolving state of the macroeconomy, rather than the effects of shocks that drive rapidly changing macroeconomic conditions.

Discussant: Menzie Chinn, University of Wisconsin-Madison and NBER [presentation]

Taylor Rules and the Euro

Tanya Molodstva, Emory University, Alex Nikolsko-Rzhevskyy, University of Memphis, David Papell, University of Houston

This paper uses real-time data to show that inflation and either the output gap or unemployment, the variables which normally enter central banks' Taylor rules for interest-rate-setting, can provide evidence of out-of-sample predictability and forecasting ability for the United States Dollar/Euro exchange rate from the inception of the Euro in 1999 to the end of 2007. We also present less formal evidence that, with real-time data, the Taylor rule provides a better description of ECB than of Fed policy during this period. The strongest evidence is found for specifications that neither incorporate interest rate smoothing nor include the real exchange rate in the forecasting regression, and the results are robust to whether or not the coefficients on inflation and the real economic activity measure are constrained to be the same for the U.S. and the Euro Area. The evidence is stronger with inflation forecasts than with inflation rates and with real-time data than with revised data. Bad news about inflation and good news about real economic activity both lead to out-of sample predictability and forecasting ability through forecasted exchange rate appreciation.

Discussant: Yu-chin Chen, University of Washington [presentation]

How Do Different Exporters React to Exchange Rate Changes? Theory, Empirics, and Aggregate Implications

Nicolas Berman, European University Institute, Philippe Martin, Science Po, Paris, Thierry Mayer, Paris School of Economics

This paper analyzes the reaction of exporters to exchange rate changes. We show that, in the presence of distribution costs in the export market, high and low productivity firms react differently to a depreciation . Whereas high productivity firms optimally raise their markup rather than the volume they export, low productivity firms choose the opposite strategy. This heterogeneity has important consequences for the aggregate impact of exchange rate movements. The presence of fixed costs to export means that only high productivity firms can export, firms which precisely react to an exchange rate depreciation by increasing their export price rather than their sales. We show that this selection effect can explain the weak impact of exchange rate movements on aggregate export volumes. We then test the main predictions of the model on a very rich French firm level data set with destination specific export values and volumes on the period 1995-2005. Our results confirm that high performance firms react to a depreciation by increasing their export price rather than their export volume. The reverse is true for low productivity exporters. Pricing to market by exporters is also more pervasive in sectors and destination countries with higher distribution costs. Another result consistent with our theoretical framework is that the probability of firms to enter the export market following a depreciation increases. The extensive margin response to exchange rate changes is modest at the aggregate level because firms that enter, following a depreciation, are less productive and smaller relative to existing firms.

Discussant: Linda Goldberg, Federal Reserve Bank of New York and NBER [presentation]

Chicago, IL – August 10, 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: American Tower Corp. (AMT), Crown Castle International (CCI), Tata Teleservices (TCL), Vodafone Plc (VOD) and Medtronic Inc. (MDT).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

U.S. Tower Giants India-Bound

Recently, American Tower Corp. (AMT) acquired XCEL Telecom Pvt Ltd., a mobile tower operator in India. XCEL owns 1,667 towers and has another 70 towers in various stages of development. The acquisition increases the total number of American Tower controlled wireless tower sights to over 26,000. Previous to this acquisition, American Tower had entered a build-to-suit agreement with a Tier1 wireless carrier in India to construct 200 tower sites.

Crown Castle International (CCI) is currently in negotiations with two Indian tower operators, Aster Infrastructure and Independent Mobile Infrastructure Ltd. Aster is holding simultaneous negotiation with American Tower.

After China, India is the second largest growth market for wireless services where the subscriber base is expected to be 737 million by 2012. This provides a significant revenue opportunity for the U.S. tower operators. At the same time, operations in India will be low-cost for these companies, which will boost their respective bottom line.

In addition to the U.S. companies, existing major tower operators in India are also trying to merge with small players to achieve the required economies of scale to compete with global giants. Tata-Quippo, a joint venture between Tata Teleservices (TCL) and Quippo Telecom Infrastructure Ltd., Indus Towers, a joint venture between Vodafone Plc (VOD), Bharti Airtel and Idea cellular, and Reliance Telecom Infrastructure are moving aggressively to increase their size of operations.

Medtronic Wins Settlement

Medtronic Inc. (MDT) won $57 million in settlement from AGA Medical Corp. after the federal U.S. district court jury in San Francisco ruled in its favor. AGA had infringed upon two U.S. patents owned by Medtronic through the use and sale of Amplatzer Occluder and vascular plug products. Medtronic will also receive 11% in royalties from future sales of these products by AGA through 2018.

The two patents in question are U.S. Patent Nos. 6,306,141 and 5,067,957, commonly known as the Jervis patents. These patents involve technologies that require the use of metal alloys to facilitate the working of doctors in different surgical operations. Medtronic has patents for these technologies.

The new ruling is a shot in the arm for Medtronic. The additional revenue generated from this settlement will take care of the company’s bottom-line. Medtronic is a leading global medical technology company specializing in implantable and interventional therapy devices and products. The company’s deep product pipeline and strong R&D program position it well for long-term organic growth, rather than having it rely purely on acquisitions.

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San Francisco, California-based PG&E’s earnings grew 32% to $388 million due to one-time gains and higher power rates. Operating income grew 12% to $656 million but revenue fell to $3.19 billion from $3.58 billion year over year. Revenue for both electricity and natural gas was down.

The quarter-over-quarter increase in earnings from operations was due to higher authorized revenue on superior capital investments in improvement of utility infrastructure. This was partially offset by expenses for environmental remediation activities.

PG&E raised long-term debt of $2.2 billion in 2008 and $1.2 billion in 2007 for financing its expansion plans. The utility’s investments in property, plant and equipment totaled $3.7 billion in 2008 and $2.8 billion in 2007.

The company has $13 billion of planned capital expenditures in the pipeline for the 2009 to 2011 period, including approximately $3.6 billion in this year. This means that its debt load will not lighten anytime soon. PG&E deployed $2.1 billion towards capital expenditure in the first half of the year.

The company reaffirmed its previous guidance for earnings from operations in the range of $3.15-$3.25 per share for fiscal 2009, $3.35-$3.50 per share for fiscal 2010 and $3.65-$3.85 per share for fiscal 2011.

PG&E is the parent company of California’s largest regulated electric and gas utility, Pacific Gas and Electric Company, which serves approximately 5.1 million electric and 4.3 million natural gas customers in northern and central California. The utility also operates hydro-electric, nuclear and fossil-fueled power plants.

Going forward, growth will came from PG&E’s focus on regulated utility operations, positive investment factors including favorable decisions from the CPUC and FERC (including a CPUC authorized 11.35% ROE until 2011), long-term supply agreements and infrastructure improvement programs. However, due to risks from pending regulatory approvals, earnings-dilutive stock issuances and an over-leveraged balance sheet, we maintain our Neutral recommendation on PG&E.

How broad-based of an audience can an exchange-traded fund focused solely on companies based in Peru attract?

Since launching a little more than a month ago, the seemingly narrow-focused iShares MSCI All Peru Capped Index Fund (NYSEArca: EPU) has seen its assets top $33 million. That’s actually down a bit from a week ago when that number surpassed $35 million. (See related story here.)

So what’s driving such growth? Performance is one factor. In the past month, EPU’s returns have shot up by nearly 4 percentage points. More significantly to longer-term investors, the country has produced the best gross domestic product growth rate in the region—or near the top, depending on periods studied and data used—for more than a decade now.

And even more assets figure to start flowing EPU’s way. Shortly after coming out on June 22 (see related story here), iShares’ parent Barclays Global Investors announced that Peru’s pension fund manager has decided to invest some $300 million into the ETF over the next several months as a way to create more liquid and diversified portfolios for their investors.

It’s a theme that Daniel Gamba, BGI’s executive director of Latin American operations, says he’s seeing spread throughout the region.

IndexUniverse.com Editor Murray Coleman caught up with him at BGI’s headquarters in San Francisco on Thursday for a discussion of the growth of ETFs in Latin America. Below are excerpts from that conversation.

IU:  How much growth are you seeing in single-country Latin American ETFs?

Gamba: The asset base for EPU since it launched in June has been growing. It was actually seeded with about $1.2 million in assets. The markets have come down in the past few days a little, but the fact that it has been growing by about $2 million a day make us fairly optimistic. The expectation is that EPU will continue to grow at least at that pace in the future. And Peru is within the top two Latin American markets currently being recommended by U.S. analysts.

IU: In the U.S., a single-country ETF like EPU might seem like a niche product. But last year, Peru’s GDP grew at a 9% rate and it’s still Latin America’s fastest-growing economy, isn’t it?

Gamba: Yes, and we’ve seen strong relative growth in that country for several years. Between 2002 through 2008, its GDP growth averaged 6.8%. That was larger than Brazil or any other country in Latin America. And the inflation rate in Peru continues to be one of the lowest in the region.

IU: Do you see more pension managers in other countries investing in ETFs?

Gamba: In Latin America, pension plans are starting to use ETFs more these days. In Chile, pension plans have about $100 billion in assets, of which around $5 billion are invested through ETFs. Our market share represents roughly 80% of those pension ETF assets. In Mexico, the total pension system is about $100 billion, with ETF pension plan assets of around $7 billion. And Peru’s pension portfolios have close to $25 billion total assets, with about $1 billion in ETFs. As a whole, our ETF market share is about 80-90% throughout Latin America.

IU: How about Brazil?

Gamba: We just listed local ETFs in Brazil at the end of last year. We currently have about $1.5 billion in assets through the local exchange. But across Latin America, there’s a big trend of pension plans moving into ETFs as a more liquid way to diversify their existing portfolios.

IU: Isn’t the Latin American pension plan model being used in other parts of the world?

Gamba: Yes, and as a result, we’re seeing ETFs being embraced in regions such as eastern Europe. Those countries are using a similar type of pension system to the one in Chile. That’s also the case in Latin America, which has also closely followed the model pioneered in Chile.

IU: What similarities do these pension systems share?

Gamba: Basically, we’re talking about a shared view that pension systems should obligate employees to contribute at least a certain percentage of their salaries. Then a group of select pension fund managers handle those assets. It’s similar to the U.S. 401(k) system, except in Latin America and eastern Europe, contributions are mandatory. The ETF structure is being viewed as a favorite with regulators in both of those regions as a means to diversify and add more transparency into the pension systems.

IU: What do you expect for ETF growth rates in pension plans in the future?

Gamba: We expect pension plan assets in Latin America to grow at an average annual rate of around 15% over the next five years. The big majority of that growth will be driven by inflows from employees, who average 28-30 years of age across the region. And again, they’re obligated to contribute.

By contrast, in developed markets around the world, we’re seeing pension plans growing in single digits, less than 10% a year.

The reduction in the quarterly dividend payout was based on the current estimate of taxable income. In order to maintain the REIT standard, companies are required to pay annually at least 90% of the taxable income as shareholder dividends.

Cousins Properties will pay the third quarter dividend in a combination of cash and stock. The cash component would not exceed one-third of the total dividend. Shareholders would have the right to decide on the composition of the dividends.

With the reduction in dividend, the company expects to retain a significant portion of its resources to capitalize on potential investment opportunities surfacing during the current recession. Furthermore, in order to increase liquidity, Cousins Properties have also scaled back its retail and office development pipeline.

As of March 31, 2009, the owned portfolio (including development/redevelopment properties) of the company consisted of interest in 7.5 million square feet of office space, 4.7 million square feet of retail space, 2.0 million square feet of industrial space, and 9,529 acres of land for future sale or commercial development.

In addition, Cousins Properties (including JVs) had four retail and office projects in various stages of development, totaling 1.8 million square feet. The properties are spread throughout the US, including Atlanta, Charlotte, Austin, San Francisco, Los Angeles and Washington DC.

Market fundamentals are deteriorating for office and retail landlords throughout the country due to the continued economic downturn. With high market vacancies and no job growth, rental rate growth on new leases will also be non-existent for some time.

Consequently, with no short-term growth indicators, the company represents a bleak outlook. We reiterate our Sell rating of the company.

After 15 years of litigation, The New York State Court of Appeals – the highest court in the state – ruled against Taubman and upheld the plea of local activists on environmental grounds. In view of the court ruling, the company would probably have to write off over $150 million invested in the project.

The recent court order forbids Taubman to develop a high-end mall at the site and leaves it with three options – a) accepting defeat and selling the land; b) contemplating a mixed-use development; or c) re-appealing against the court order. A spokesperson said that the company is currently evaluating all options before taking a final call on the decision.

Taubman owns, develops, acquires and operates regional shopping centers throughout the US. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.

The Oyster Bay project had been a continuous drag on the company’s earnings. During the fourth quarter of 2008, Taubman recorded $116 million as impairment charges for the project due to continued delay and uncertainty regarding completion of the project.

Taubman has a high quality roster of high-end and specialty retailers at its malls and commands some of the highest rents in its sector. High-end and specialty retailers have been the hit hardest in the current recession and this trend will continue through at least the end of this year.

The recent spate of unfavorable court rulings would also add to the woes of the company. However, we think Taubman is better positioned than many peers due to its clean balance sheet and minimal debt maturities. We reiterate our Hold rating of the company.

Chicago, IL – July 9, 2009 – Zacks Equity Research highlights MIPS Technologies (MIPS) as the Bull of the Day and Altria Group (MO) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Citigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

MIPS Technologies (MIPS) develops embedded processors and intellectual property for use in performance-oriented markets such as digital entertainment, wired and wireless communications (including broadband access), office automation, security and automotive markets.

The firm continues to drive bottom-line margins higher in a very difficult environment. The valuation on MIPS has become very compelling as the stock has shed significant value from its 52-week high and the new acquisition has the potential to drive margin expansion.

Further, MIPS recently sold its analog business, which is highly accretive. We would be buyers of the stock at these levels.

Bear of the Day:

Altria Group (MO) is the leading domestic tobacco company, which generates significant cash flow and the stock has a high dividend yield. In an effort to expand into adjacent categories, Altria acquired UST, the world's leading moist smokeless tobacco manufacturer.

However, the company is engaged in numerous tobacco liability suits. Several large punitive damage awards have been upheld, most recently the $79.5 million judgment in the Williams case in 2009.

In addition, the 150+% federal excise tax increase should dramatically reduce cigarette volume. A Sell rating is recommended.

Latest Posts on the Zacks Analyst Blog:

Even Landlords May Be Hurting

2Q09 asking rent fell 0.7% year-over-year to $1,040 a month, and down 0.6% from on a linked quarter basis. In the U.S.’s largest U.S.’s apartment market, New York, vacancies fell 0.5% on a linked quarter basis and a 4.0% declined year-over-yearto 2.9%, despite a 1.7% decrease in rent to the $2,680 level. In addition, other areas of the country (such as Las Vegas, San Francisco and San Jose, California) had effective rents that dropped more than 2.0% year-over-year.

Nationally the picture may grow worse, with approximately 45% of the more than 100,000 units from new construction for 2009 already on the market. As unemployment has continued to mount, the largest tenant group -- 18-24-year-olds -- has been hardest hit.

With general expectations of an economic recovery pushed back to early 2010, lower rents and higher vacancies should be expected to continue over the near term.

With the apartment buildings sector typically the leader for all commercial real estate categories with respect to defaults, it is extremely probable that financial institutions such as (but not limited to) Citigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM) will continue to experience negative commercial real estate credit quality trends during the coming quarters.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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 analyst 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 by visiting http://at.zacks.com/?id=5508.

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=5509.

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Most real estate companies were forced to lower rents to attract and keep tenants. In addition, tenants are demanding more concessions in the form of free rent and capital improvements.

During the quarter, asking rent in the office segment decreased 1.4% to $28.43 per square foot. Taking into account the rent-free months and improvement costs to landlords, effective rents or net cash received as rent decreased 2.7% in the quarter to $23.42 per square foot. Consequently, with decreasing cash flows the risk of loan defaults has increased considerably in the office segment.

According to Reis, the US office market has declined at a steady pace since the third quarter of 2007 when vacancy was 12.5%. The weakening office market does not bode well for most real estate investment trusts (REITs) like Liberty Property Trust (LRY), Mack-Cali Realty Corp. (CLI), and Cousins Properties Inc. (CUZ).

Based in Pennsylvania, Liberty Property focuses primarily on prime suburban properties in the Southeast, Mid-Atlantic, and Midwest regions of the United States. Fundamentals are declining in most of the company’s office markets as corporate expansion continues to slow. We are projecting negative rental growth rate on new/renewal leases in markets that are characterized by high vacancies and negative job growth. We reiterate our Sell rating of Liberty Property.

Mack-Cali Realty owns, leases, manages, and develops Class A office and industrial/flex properties, primarily in suburban markets in the northeastern US. We think the company will have a difficult time raising rents as leases roll over the next couple of quarters. We don’t think the company can continue to outpace occupancy market averages over the long term. We maintain our Sell rating of Mack-Cali Realty.

Atlanta, Georgia-based Cousins Properties controls properties throughout the U.S., in the office markets of Atlanta, Charlotte, Austin, San Francisco, Los Angeles, and Washington DC. Many of the company’s office markets – Atlanta, Austin, Birmingham, Dallas, and Charlotte – are seeing large jumps in office vacancies. With high market vacancies and no job growth in most of its markets, growth of rental rate on new leases will be non-existent for some time. We reiterate our Sell rating of Cousins Properties.

AMB Property Corp. (AMB), a leading global owner, operator, and developer of industrial real estate, has recently signed a 172,000 square foot leasing agreement in South San Francisco. The deal was signed with DBI Beverage Inc., one of the leading beverage distributors in the U.S. The 10-year agreement was the largest industrial leasing deal signed in a decade in the region.

The 21.5 acre property, located at 245 Spruce Avenue in San Francisco, currently has 560,000 square feet of space, out of which only 172,000 square feet was leased to DBI. AMB intends to utilize the space for transit-oriented development. However, with market fundamentals deteriorating in the housing, retail and office properties, the company has decided to lease the space for distribution and warehousing facilities.

The leased facility is strategically located in the close proximity of the San Bruno station - a Bay Area Rapid Transit (BART) station located adjacent to the Tanforan shopping center in suburban San Bruno, California. With the deal, DBI has gained a tactical advantage of access to superior transport facilities, which will better serve its customers.

The majority of AMB's portfolio comprises high throughput distribution (HTD), which provides multiple options for quick movement and the distribution of goods to the customer. HTD properties are warehouses or other industrial properties that are located near airports, seaports, and ground transportation facilities, which enable rapid distribution of customers' products. These HTD centers are typically located in areas characterized by global ports in supply-constrained, in-fill markets, which enable the company to gain a significant pricing advantage.

The company has a concentration of assets in high-barrier gateway markets that hold up better in a recessionary environment. While 2009 will be a more difficult year for industry-focused REITs, AMB is well positioned to weather the downturn.

With a strong balance sheet, AMB is much better prepared than private developers and smaller public companies to tide over the continued global economic slump. We reiterate our Hold rating of AMB.