Zacks Analyst Blog Highlights: Countrywide Financial, Capital One, Bear Stearns and Acusphere

Business Wire, August 13, 2007

CHICAGO -- 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: Countrywide Financial (NYSE: CFC), Capital One (NYSE: COF), Bear Stearns (NYSE: BSC) and Acusphere (Nasdaq: ACUS).

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Friday's Analyst Blog:

Fed Pumps In Liquidity

This morning the Federal Reserve released the following statement:

"The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets.

"The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4 percent. In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets. As always, the discount window is available as a source of funding."

The Federal Reserve, as well as other central banks, is making more currency available in an attempt to encourage lending by banks. Overnight rates, the interest rates at which banks make overnight loans to each other, had risen sharply above the Fed's target rate of 5.25%. This was a sign that lenders were being reluctant about lending money.

What the central banks are trying to do is avoid a liquidity crisis. Many market corrections (and crashes) have been caused by liquidity crises. Throughout history, there have been cycles of too much risk be taken on only to be followed a by recession as lenders realized that euphoria and hubris had replaced rational thinking. The mispricing of junk debt and the now ongoing correction is a sign of history repeating itself. What the central banks are trying to do is to prevent a correction in the debt markets from turning into a recession.

In the backdrop of this action, Countrywide Financial (NYSE: CFC), Capital One (NYSE: COF) and Bear Stearns (NYSE: BSC) are all up for the week (as of the first 15 minutes of trading on Friday). In other words, the developing credit crunch has not truly affected stock prices. Could this change? Perhaps, but no one really knows how deep (or shallow) the junk debt rabbit hole is.

Acusphere a True Bargain

It's been a little less than four months since the RAMP-2 data came out, and Acusphere (Nasdaq: ACUS) shares are down 65% since then. Wall Street clearly thinks the company's drug Imagify has little chance for approval. In the meantime, cash burn is a concern and management is going to have to figure out how to raise money yet again in 2008. As a result, the Street views ACUS like a sinking ship.

With all that said, the opinion of medical and echo-cardiology community couldn't be more different from that of Wall Street. Cardiologists are excited about the data and the clear majority expects the use the drug immediately upon approval. Why is there such a split opinion, and who is right?

It is clear to us that this drug works, and is an extremely useful tool in the diagnosis of coronary artery disease (CAD). Looking at the tapes we quickly forgot about the botched trial endpoints, the dilutive offerings, and the mismanaged expectations of Wall Street. What we saw was powerful - a drug that really does do what it says, regardless of the statistical rigmarole.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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