Zacks Broker Upgrades: Safeway, Weyerhaeuser Company, J.C. Penney and State Street Corporation

Business Wire, Dec 21, 2006

CHICAGO -- Studies have shown that broker upgrades lead to short-term outperformance. Stocks recently upgraded by brokerage analysts include Safeway Inc. (NYSE: SWY), Weyerhaeuser Company (NYSE: WY), J.C. Penney Corporation, Inc. (NYSE: JCP) and State Street Corporation (NYSE: STT). To learn more about how you can profit from broker upgrades, visit: http://at.zacks.com/?id=139.

Here is a synopsis of stocks with recent broker upgrades:

Safeway Inc. (NYSE: SWY) recently forecasted earnings per share between $1.90 and $2 for 2007, which gives it a good chance to surpass the consensus of about $1.94. The company's Average Broker Recommendation advanced to 2.40 over the past week. Furthermore, the supermarket chain expects ID sales to grow about 3.3% during the year, due to continued strong contributions from Lifestyle stores and production innovation.

"We have achieved significant improvements in our perishable offerings and executed our Lifestyle store program in over 40% of our stores, with great results," said Chairman, President and CEO Steve Burd. "We have also been working to establish new growth vehicles to ensure healthy long-term growth for out business."

According to Zacks Research Digest, analysts are encouraged by Safeway's Lifestyle store program. By the end of 2009, Lifestyle will likely touch over 80% of the chain. This rapid renovation should ideally create a platform for strong merchants to drive identical stores sales growth with innovative product and new programs. The analysts unanimously believe that the Lifestyle remodels are a move in the right direction and recent performance has been encouraging as the Lifestyle concept offers better differentiation versus its competition and will improve the company's ability to market and sell at the local level.

Weyerhaeuser Company (NYSE: WY) watched its Average Broker Recommendation rise to 2.00 recently. According to Zacks Research Digest, analysts like that the integrated forest products company continues to pay down debt and strengthen its balance sheet. Furthermore, the company is seen as focused on innovative products and processes, and seeks to return cash to shareholders through increased dividends and opportunistic share repurchases. Analysts also believe that Weyerhaeuser has the ability to attract customers, introduce new products and expand distribution channels.

Earlier this week, Weyerhaeuser announced that it will permanently close two veneer technologies manufacturing operations in Oregon, effective immediately. They include a plywood mill in Springfield and a veneer plant in Coburg. In the week earlier, the company announced a strategy to revamp its lumber operations in Washington, including the closure of its Green Mountain sawmill and the building of a new, more efficient lumber mill.

J.C. Penney Corporation, Inc. (NYSE: JCP) has undergone a significant transformation over the last four years, according to analysts in the Zacks Research digest, and the major centralization initiatives are now complete. Analysts have many positive arguments concerning this department store giant, including its private brands and increased use of catalogs and Internet, which continues to drive sales momentum. Also, the company's continuing efforts to develop its off-the-mall format stores is seen as a growth driver for the future. Margin expansion should be driven by better sourcing and improved inventory control, better markdown activity, and benefits of planning and allocation technology. It also continues to effectively utilize cash, while shoring up its balance sheet and returning value to shareholders.

J.C. Penney is a Zacks #2 Rank stock. Earnings estimates for the fiscal years ending January 2007 and January 2008 are up 3.9% and 3.8% respectively from two months ago. For its fiscal third quarter, the company reported earnings per share of $1.26 that jumped 34% year-over-year from 94 cents, and beat the consensus by approximately 3.3%. Comparable store and Internet sales advanced 5.2% and 27% respectively. For December, J.C. Penney expects both comparable department store and Direct sales to increase in the low-single digits. Given this bullish momentum, it is not surprising to see JCP's average broker recommendation improve to 2.04 over the past seven days.

State Street Corporation (NYSE: STT) recently announced that State Street Global Markets, its investment research and trading arm, said investor confidence increased by 5.2 to 87.4 in December. In November, the reading was 82.2. The results came from the State Street Investor Confidence Index[R] for December 2006. According to Zacks Research Digest, analysts believe the company is positioned to benefit from macro trends, should continue to win its share of new business, and is well positioned in Asia Pacific and Europe.

One brokerage firm believes that State Street has well positioned itself to facilitate the changes that have occurred in the world capital markets, the fixed income markets, the way the money is managed, and the need for simple reporting techniques. Another brokerage firm believes the company has consistently kept expenses under control, delivered positive operating leverage, expanded net interest margin via its balance sheet repositioning, grown its international operations, developed new products and services, expanded investment management offerings, and improved overall profitability in the past few quarters. This positive sentiment explains why STT's average broker recommendation has been improving and now sits at 2.31.