Zacks Bull and Bear of the Day Highlights: IBM Corp., Liberty Property Trust, Critical Therapeutics, Hanesbrands and CNOOC

Business Wire, April 1, 2008

CHICAGO -- Zacks Equity Research highlights International Business Machines (NYSE: IBM) as the Bull of the Day and Liberty Property Trust (NYSE: LRY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Critical Therapeutics (Nasdaq: CRTX), Hanesbrands, Inc. (NYSE: HBI) and CNOOC, Ltd. (NYSE: CEO). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: International Business Machines (NYSE: IBM)

We are re-launching coverage of IBM Corporation with a Buy rating and $128 price target. With over half its revenue (58%) coming from outside the United States, IBM is more insulated from the slower U.S. economy than many of its peers. Moreover, IBM's focus on faster growing markets through a series of acquisitions and divestiture of mature businesses give the company a positive growth outlook.

Bear of the Day: Liberty Property Trust (NYSE: LRY)

The company slightly beat our FFO estimates as operations were better than expected in the 4th quarter. Operations are holding up reasonably well. Although, we still rate LRY a Sell despite a low comparative valuation and recent price drops. We expect rental rates to remain flat through 2008, as the company has assets in office markets that have high vacancies. Additionally, Liberty continues to run a deficit to cash flow, that is, the dividend is not being covered with operating cash. We expect this to continue in 2008 as competition for tenants will become worse in a faltering economy. Finally, Liberty has a large development pipeline that is only mildly pre-leased, and poses a real risk should the economy continue to soften in 2008.

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Critical Therapeutics (Nasdaq: CRTX)

Critical Therapeutics is a biopharmaceutical company focused on the discovery, development and commercialization of products for respiratory, inflammatory and critical care diseases. The company has two products for asthma, Zyflo and Zyflo CR, on the market. With the completion of the restructuring and the signing of co-promotion agreement with Dey LP, we believe both top line and bottom line will improve in the coming quarters. However, sales of Zyflo/Zyflo CR fell short of our expectation. The strategic shift announced in late 2007 also put the company in a uncertain condition.

Critical Therapeutics, Inc. reported financial results for the fourth quarter and year ended December 31, 2007. Net product sales of Zyflo CR (zileuton) extended-release tablets and Zyflo(R) (zileuton tablets) totaled approximately $2.7 million in the fourth quarter of 2007, compared with $1.9 million of net sales of Zyflo in the fourth quarter of 2006, an increase of 39 per cent.

Hanesbrands, Inc. (NYSE: HBI)

Hanesbrands' business model requires only modest sales growth to create substantial EPS growth. Earnings are being driven by brand building and cost-reduction initiatives. Since the spin-off in September 2006, the company has reduced debt by $285 million, lowering interest expense from the post spin-off financial structure.

Management's goal is for the non-GAAP operating profit margin to increase by 50 to 100 basis points (bps) per year, driven by cost-reduction initiatives, which are ultimately targeted at generating gross annualized savings of $200 million. Coverage is initiated with a Hold rating. Hanesbrands has only 19 months of trading history. The stock has traded in P/E range between 13 and 20. Hanesbrands is currently selling at 17.1 times trailing 12-month EPS. The target price is $30.50, which is an 18.5 P/E multiple on 12-month trailing earnings.

CNOOC, Ltd. (NYSE: CEO)

CNOOC reported slightly higher net income for 2007 due to oil tax and increased production. However, the company continues to achieve steady growth in oil and gas production and reserves. Although there are concerns related to the volatility in global oil prices, higher operating costs, and regulatory changes, we think that the company's current valuation does not fairly reflect its positive production growth profile and leverage to the Chinese natural gas market.

Therefore, we maintain our Buy rating on the stock. CNOOC Ltd. has the exclusive right to jointly conduct exploration and production activities in areas off China's coast with other international oil and gas companies. The company's ability to enter into production-sharing contracts with foreign companies allows it to acquire, at no cost, an interest of up to 51% in any successful discovery off China's coast.

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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