Zacks Bull and Bear of the Day Highlights: Lockheed Martin, UAL Corporation, Dr. Reddy's and Tractor Supply

Business Wire, Oct 26, 2007

CHICAGO -- Zacks Equity Research highlights Lockheed Martin (NYSE: LMT) as the Bull of the Day and UAL Corporation (Nasdaq: UAUA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dr. Reddy's Laboratories, Ltd. (NYSE: RDY) and Tractor Supply Company (Nasdaq: TSCO). 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 Lockheed Martin (NYSE: LMT). Lockheed Martin appears well positioned to continue benefiting from strong defense outlays through 2008. Solid operating results, via existing and new contracts, both domestic & international, coupled with the success of its C-130J and F-35 aircrafts, continue to deliver strong earnings and cash flow growth. Management's increased 2007 and favorable 2008 earnings guidance support the bullish outlook. Additionally, the company's dividend was recently increased by 20%. Accordingly, we maintain a BUY recommendation on LMT common stock, with an increased six-month target price of $117.50. Price appreciation to our near-term valuation target, coupled with the increased $0.42 per share quarterly dividend which we consider sustainable and secure due to low projected earnings payouts represents annualized total return potential of 22.4%.

Bear of the Day:

Our Bear of the Day recommendation is for UAL Corporation (Nasdaq: UAUA). We are continuing our Sell on UAL Corporation (or UAL, or United), but raising our target price to $41. UAL shares have significantly outperformed the industry this year, and are now trading at a substantial premium to the industry, which we do not feel is justified by UAL's fundamental outlook. UAL reported third quarter EPS of $1.96, ahead of the $1.88 consensus and our estimate of $1.50, reflecting higher-than-expected revenue growth partly due to an accounting change. We expect modest revenue growth, based upon reduced domestic capacity, while higher profit sharing and maintenance costs should hurt margins. Moreover, the recent spike in oil prices portends higher fuel costs. Our estimates reflect $400 million of cost take-outs over 2006-07.

Analyst Blog:

Dr. Reddy's Laboratories, Ltd. (NYSE: RDY) is a global pharmaceutical company located in Hyderabad, India. RDY produces active pharmaceutical ingredients (API), finished dosage forms, and branded and generic pharmaceutical products for the global market. The company has a healthy pipeline and is an active participant in terms of international product filings. During fiscal 2007, RDY experienced both top line and bottom-line growth thanks to many products going off-patent over the past several months. RDY currently has 69 ANDAs filed with the U.S. FDA., which should present future growth opportunities for the company. Besides this, we are also pleased with the company's efforts to cut down costs by entering into strategic alliances for the development of certain pipeline candidates.

Tractor Supply's (Nasdaq: TSCO) third quarter earnings per share missed our estimate by $0.04, and management lowered its guidance for the fourth quarter. The lower-than-expected results were due to the weather and a weaker consumer. Still, we maintain our Hold rating on the stock. The company's store expansion plans, expanded merchandise mix, and operating improvements bode well for its long-term growth. But near-term issues will continue pressure consumer spending, making it difficult for Tractor Supply for the next few quarters. All told, the shares look reasonably valued at current levels. Tractor Supply shares currently trade at 18.6 times our 2007 EPS estimate and 15.3 times our 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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