Zacks Bull and Bear of the Day Highlights: SABESP, Centennial Communications, Countrywide Financial and Northrop Grumman

Business Wire, August 15, 2007

CHICAGO -- Zacks Equity Research highlights SABESP (NYSE: SBS) as the Bull of the Day and Centennial Communications (Nasdaq: CYCL) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Countrywide Financial (NYSE: CFC) and Northrop Grumman (NYSE: NOC). Full analysis of all four stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all four stocks:

Bull of the Day:

Our Bull of the Day recommendation is for Companhia de Saneamento Basico do Estado de Sao Paulo, or SABESP (NYSE: SBS). The company posted better-than-expected results for the second quarter 2007, the short-term outlook remains positive and the stock still trades at an attractive valuation. Additionally, the company should benefit from the new regulatory framework approved by the Brazilian Congress, the new tariff adjustment and the positive business environment in Brazil, including declining domestic interest rates. The new protocol for integrated sanitation and housing signed between the Government of Sao Paulo and the Federal Government is also very positive.

Bear of the Day:

Our Bear of the Day recommendation is for Centennial Communications (Nasdaq: CYCL), a regional provider of wireless and integrated communications. Revenue performance has been impervious to better-than-expected subscriber retention, and lower roaming traffic continues to weigh on overall top-line growth. We remain concerned with net debt in excess of $2.0 billion and limited cash liquidity, although the company was able to solidify further debt financing during the quarter. Moreover, we are not very encouraged by management's outlook for 2008. We continue to await indications of improved operating profitability as changes in business strategy are taking longer to harness upside trends in earnings.

Analyst Blog:

Countrywide Financial's (NYSE: CFC) 2Q07 results were $0.81 per share, versus $1.15 per share in the prior-year period. Results were impacted to the extent of $0.18 per share and $0.14 per share, to our and consensus estimates, respectively. The shortfall stemmed from increased impairment charges and loan loss provisions on account of continued weakness in the housing market. The shares have been quite volatile and are now down almost 22% since the earnings release. We expect the volatility to continue as the investors will cautiously watch the developments in the mortgage markets; however, we think that the firm has the financial strength and sound management to tide over the crisis. Given near-term concerns, we are reiterating our Hold rating on the shares.

Northrop Grumman (NYSE: NOC) offers a strong program portfolio positioned to take advantage of high growth areas in the defense budget, an improving balance sheet, and an ongoing share repurchase program. Favorable projected revenue, diversified revenue and earnings streams with strong growth and discounted relative valuation metrics collectively support our bullish outlook for NOC. Accordingly, we maintain our BUY recommendation on NOC common stock with a six-month target price of $85.00. Price appreciation to our near-term valuation target, coupled with the increased $0.37 per share quarterly dividend which we deem secure and sustainable based upon low projected payouts represents annualized total return potential of 21.8%.

Get the full analysis of all four stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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