Zacks Bull and Bear of the Day Highlights: L-3 Communications, Aventine, FEMSA and Burlington Northern Santa Fe

Business Wire, Nov 1, 2007

CHICAGO -- Zacks Equity Research highlights L-3 Communications (NYSE: LLL) as the Bull of the Day and Aventine, Inc. (NYSE: AVR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on FEMSA (NYSE: FMX) and Burlington Northern Santa Fe Corporation (NYSE: BNI). 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 L-3 Communications (NYSE: LLL). L-3 Communications registered strong operational and financial results in the first three quarters of 2007. The company delivered growth across multiple business segments. This prompted management to raise 2007 sales, earnings and free cash flow guidance. This growth trend is expected to continue through 2007-08 due to an impressive product portfolio coupled. Earnings growth will come through both organic and accretive acquisitions. Accordingly, we reiterate our BUY recommendation on LLL common stock with a six-month target price of $120. Price appreciation to our near-term valuation target, combined with the recently increased $0.25 per share quarterly dividend which we deem to be very sustainable and secure based upon low projected payouts, represents annualized total return potential of 23.9%.

Bear of the Day:

Our Bear of the Day recommendation is for Aventine, Inc. (NYSE: AVR). Aventine reported weaker-than-expected third quarter results this afternoon. EPS came in at a loss of $0.21 per share after netting out one-time tax benefits. The company was hit by sharply lower ethanol pricing and continued high corn costs. Rapid ethanol supply growth has continued, while demand has been held back due to refiner infrastructure constraints. These negative trends are expected to continue into the fourth quarter and first half of 2008. Based on these near-term headwinds, we have lowered our target price to $10 from $15 previously. Our rating remains unchanged.

Analyst Blog:

We are keeping our Hold recommendation on Fomento Economico Mexicano, S.A. de C.V., or FEMSA (NYSE: FMX). The company posted good results for the third quarter 2007. Coca-Cola FEMSA's and FEMSA Comercio's performances were particularly encouraging. However, the results of the Mexican beer business were somewhat disappointing, and the competition in the key Mexican market remains a concern. The possibility of a recession in the U.S. and its influence on Mexico is also a problem. Finally, we do not consider FMX's current valuation particularly attractive.

We are continuing our Hold on Burlington Northern Santa Fe Corporation (NYSE: BNI), but raising our target price to $88. BNI reported 2007 third quarter diluted EPS of $1.48, up 12% year over year and $0.12 greater consensus and $0.06 above our $1.42 estimate, as revenues came in higher and compensation expense came in lower than we had estimated. Despite this, we are reducing our diluted EPS estimates to $5.20 from $5.25 for 2007 and to $5.90 from $6.15 for 2008, largely due to significantly higher unhedged fuel costs. Positively, revenues should benefit from fuel surcharges and rate increases, partially offset by lower volumes. BNI recently increased its dividend 28% to a $1.28 annual rate, providing a 1.5% yield.

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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