Zacks Bull and Bear of the Day Highlights: J.C. Penney, Overstock.com, Ball Corporation and Cypress Semiconductor

Business Wire, Feb 8, 2007

CHICAGO -- Zacks Equity Research highlights J.C. Penney (NYSE: JCP) as the Bull of the Day and Overstock.com (Nasdaq: OSTK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ball Corporation (NYSE: BLL) and Cypress Semiconductor (NYSE: CY). 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 J.C. Penney (NYSE: JCP). We are upgrading the shares of J.C. Penney from Hold to Buy. The company continues to demonstrate its ability to be smart retailer carrying the correct levels of the right merchandise that its customers want to buy. Its solid comp-store sales and earnings growth in recent quarters is proof of that. Moreover, the company is capitalizing on this strong performance by opening new stores at a decent pace. As such, we think J.C. Penney's business momentum, higher profit margins, and stock repurchases bode well for its EPS growth for the next several years. Our six-month target price is $95, or 17 times our 2007 EPS estimate.

Bear of the Day:

Our Bear of the Day recommendation is for Overstock.com (Nasdaq: OSTK). Overstock.com reported even worse fourth quarter results than we expected. Fourth quarter sales declined 6.5%, and the company lost $1.92 per share. We forecasted a sales decline of 1% and a net loss of $0.98/share. By its own admission, management cleared the decks in the fourth quarter in order to reduce inventory levels heading into 2007. Management also indicated that it was going to focus on profit margins and not growing its top-line. Unfortunately, we don't believe this model works and needs further changes to become profitable. We reiterate our Sell rating and $10 target price.

Analyst Blog:

Ball Corporation (NYSE: BLL) reported fourth quarter EPS [earnings per share] of $0.65, up 25% year-over-year [y-o-y], on the back of acquisitions, price increases, higher volumes and strong demand in China and Eastern Europe. Going forward, Ball's strong packaging fundamentals amid growing beverage can demand, as well as its cost containment efforts, should support double-digit sales and EPS growth. Nevertheless, the Metal Food and Household Products Packaging, Americas unit is suffering from lower food can volumes and a difficult pricing environment, and soft prices (due to market overcapacity) are limiting margin expansion in the company's PET [polyethylene terephthalate] business. We reiterate our Hold recommendation on the stock.

Cypress Semiconductor (NYSE: CY) reported its financial results for the fourth quarter [Q4] of 2006. Revenue was $287.0 million, down 1.1% sequentially and below our estimate of $290 million. On a GAAP [generally accepted accounting principles] basis, earnings per share was $0.09. Including the impact of stock-based compensation, the pro forma EPS [earnings per share] was $0.08, below our estimate of $0.11. Revenue and gross margins in Q4 were adversely affected by softness in the communications market. On the other hand, SunPower revenue grew 14% sequentially and over 154% year over year. Also, entering the first quarter, revenue for that quarter was 86% booked. We rate the stock a Hold and have set a target price of $19.

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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