Zacks Analyst Blog Highlights: Telecom Italia, Telefonica and Northrop Grumman

Business Wire, May 1, 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: Telecom Italia (NYSE: TI), Telefonica SA (NYSE: TEF) and Northrop Grumman (NYSE: NOC).

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

Here are highlights from Monday's Analyst Blog:

Bravo: Telefonica Acquires TI Stake

After prolonged searches and discussions, Telecom Italia (NYSE: TI) may have found an interested global telecom provider to take charge, without Telecom Italia relinquishing foreign control. In a complicated share transaction, it was announced that Telefonica SA (NYSE: TEF) has agreed to attain approximately 42% of Telecom Italia through a newly formed holding company Telco SpA.

The deal represents a compromise between Italy's government request to maintain Telecom Italia's control in domestic hands, while reaching a deal with holders, including Pirelli and the Benetton family to revamp Telecom Italia's financial prospects, perhaps by expanding on a more global basis. Both Telefonica and Telecom Italia already have significant positions in the South American mobile phone services, and Telefonica continues its expansion drive in Europe.

The transaction, while complicated, is also exposed to continued cross-border scrutiny and demonstrates the issues at hand that remain following acquisitions in different countries, especially when political issues are at stake. The deal is valued at approximately U.S. $5.6 billion.

Still Bullish on Northrop Grumman

Northrop Grumman (NYSE: NOC) offers a strong program portfolio positioned to take advantage of high growth areas in the defense budget, strong cash-flow generation, an improving balance sheet, and an ongoing share repurchase program. Favorable projected revenue and earnings comparisons with strong growth and discount relative valuation metrics support our bullish outlook for NOC common stock.

Accordingly, we maintain our BUY recommendation on NOC with an increased six-month target price of $80.00. 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 on low projected payouts represents annualized total return potential of 17.0%.

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

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