Zacks Bull and Bear of the Day Highlights: Pride International, SLM Corp., Fidelity National Information Services and Kroger

Business Wire, Dec 14, 2007

CHICAGO -- Zacks Equity Research highlights Pride International (NYSE: PDE) as the Bull of the Day and SLM Corporation (NYSE: SLM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Fidelity National Information Services (NYSE: FIS) and Kroger Co. (NYSE: KR). Full analysis of all these 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 Pride International (NYSE: PDE). We are upgrading Pride shares to Buy from Hold following the recent weakness, which has made valuation very attractive, in our view. Pride's strong offshore drilling leverage and expanding international operations, supported by long-term contracts, are expected to drive stock price gains going forward. The company's operating focus has significantly increased following the recent sale of its Latin American Land and E&P Services assets. The company's solid backlog position provides adequate revenue and earnings growth visibility, going forward. We have adjusted our 2007 EPS estimate lower ($2.63 vs. $2.77) and raised our 2008 estimate ($3.65 vs. $3.42) to reflect changes to our model.

Bear of the Day:

Our Bear of the Day recommendation is for SLM Corporation (NYSE: SLM). On December 12, 2007, SLM announced that the buyer group, led by J.C. Flowers, does not wish to pursue the acquisition deal now. It also issued a revised financial guidance for 4Q07 and FY08. The company now expects to earn between $0.52 and $0.57 during 4Q07 and between $2.60 and $2.80 during FY08 (down from previous guidance of $3.25), as a result of increased funding costs and reserves for FFELP program. In view of the declining profitability under the new legislation, increased funding costs and rising loan defaults, we are lowering our FY07 and FY08 estimates and our six-month target price. As we expect the challenging environment for the industry to continue to impact the profitability of the company, we maintain our Sell recommendation on the shares.

Analyst Blog:

Fidelity National Information Services (NYSE: FIS) has been an active acquirer to drive growth, and we believe the eFunds acquisition will offer both top-line and cost synergies. Tempering this growth is a declining market for check services and a slowing mortgage market. Further, a strong pipeline of contracts - both domestic and international - will benefit the company. We, therefore, maintain our Hold rating on FIS with a six-month price target of $46.00. We are encouraged by FIS prospects given the broad offering of the combined company as well as the agreement to acquire EFD/eFunds. Although we believe that the company has the potential to grow at a healthy rate over the next few years, a declining check services market and a slowing mortgage market concern us.

Kroger Co.'s (NYSE: KR) third quarter sales were ahead of our forecast, but its earnings (excluding a one-time $0.07/share tax benefit) were $0.05 per share below our estimate. We are increasing our sales estimates for 2007 and 2008. However, we are lowering our EPS estimates due to lower gross margin assumptions. All told, the company's solid top-line growth, operating cost controls, and improved financial health should continue to produce impressive results. Even so, the stock looks fairly valued at current levels. Kroger shares are trading at 15.8x our fiscal year 2007 EPS estimate and 13.9x our fiscal year 2008 EPS estimate.

Get the full analysis of all these 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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