Zacks Bull and Bear of the Day Highlights: Freeport-McMoRan, Alcatel-Lucent, Builders FirstSource and Prologis

Business Wire, August 2, 2007

CHICAGO -- Zacks Equity Research highlights Freeport-McMoRan (NYSE: FCX) as the Bull of the Day and Alcatel-Lucent (NYSE: ALU) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Builders FirstSource (Nasdaq: BLDR) and Prologis (NYSE: PLD). 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 Freeport-McMoRan (NYSE: FCX). Freeport-McMoRan Copper & Gold, Inc. is engaged in the exploration, development, mining and milling of copper, gold and silver in Indonesia. The company is witnessing strong growth backed by improved productivity and a strong cash flow position. The merger with Phelps Dodge Corporation has positioned the company as the second-largest copper producer and the largest publicly traded copper company globally. Hence we maintain our positive outlook on the stock and rate it a Buy with a six-month target price of $102.00.

Bear of the Day:

Our Bear of the Day recommendation is for Alcatel-Lucent (NYSE: ALU). ALU reported a weaker-than-expected second quarter, as revenue growth was better than expected, but due to continued pressure and spending, margins were lower than our expectations, which caused the company to report a loss in the quarter. While we would consider the revenue growth encouraging, the declining margins are a cause for concern as robust sales from the Asia/Pacific region are at much lower margins. We continue to rate shares of ALU a sell, and have lowered our earnings estimates and price target for the remainder of 2007. Our new price target of $10 per share is based on the company selling at 20x our new 2007 EPADS estimate of $0.49 per share.

Analyst Blog:

Builders FirstSource's (Nasdaq: BLDR) sales were $23 million below our forecast, but its EPS [earnings per share] were $0.04 ahead of our estimate thanks to a lower-than-expected tax rate. The company continues to face an uphill battle in an extremely difficult housing industry that will persist well into 2008. This will negatively impact BLDR's sales and earnings for the next few quarters. That said, we think the company is a strong operator that should continue to take market share, but its business model will not be able to overcome the overall weakness in the housing industry. We would avoid the stock until it trades substantially lower or there is evidence of stabilization in the housing market.

Prologis (NYSE: PLD) had a good 2nd quarter, reporting FFO [funds from operations] of $1.16 per share, exceeding our estimates by $0.26 per share. With continued rental rate and occupancy increases, same-store net operating income increased 6.2% vs. 2Q 2006. The entire industrial sector is being propelled by positive absorption, and limited new supply deliveries in most North American and international markets. PLD continues to realize strong gains from merchant building, as asset valuations are still near historical highs. In addition, the company is ramping up its property funds management business, which contributed a significant portion to FFO. Due to a recent share price decline, the company's valuation remains compelling, as we expect PLD to outperform industrial peers in 2007.

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

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