Zacks Analyst Blog Highlights: Reuters Group, Thomson Corp., Johnson & Johnson, Countrywide Financial and Bank of America

Business Wire,  April 18, 2008  

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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: Reuters Group (Nasdaq: RTRSY), Thomson Corp. (NYSE: TOC), Johnson & Johnson (NYSE: JNJ), Countrywide Financial (NYSE: CFC) and Bank of America (NYSE: BAC).

See the latest posts to the Analyst Blog:

http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Thursday's Analyst Blog:

Hold Reuters Ahead of Merger

Reuters Group (Nasdaq: RTRSY) reported solid revenue growth during the fourth quarter, despite the slowdown in growth in its Sales & Trading Group, which suffered from the turmoil in the financial markets. Revenues and earnings were below our estimates, though.

Revenues from all three other segments grew at an accelerated rate, and more importantly, regulatory clearances were obtained from E.C. for the merger between Reuters and Thomson Corp. (NYSE: TOC) on February 29th, 2008, which means that the deal could be completed by the end of the second quarter of 2008.

We have fixed our six-month target price at $73.50 a share on RTRSY because of the current bearish sentiment in world markets, although the stock should sell at around the offer price as the merger approaches completion in 2Q08.

We are maintaining our Hold rating at this time as we feel that the upside to the stock should be limited until the merger is completed sometime in the second quarter of 2008. Finally, we are lowering our estimates due to the weaker 4Q revenues and our new currency expectation of the US Dollar trading at $2.05 per PS1 and the latest round of Fed rate cuts, the effects of which would be felt in 2008.

J&J Fairly Priced Up to $70

Johnson & Johnson (NYSE: JNJ) is one of the world's largest providers of healthcare products in the consumer, pharmaceutical and medical devices market. It has over 200 operating companies around the world and sells its products in more than 175 countries. J&J has an enormously diverse revenue stream consisting of market leading products in all three of its business segments.

Due to a number of products expected to experience declining sales, revenue growth in the next few years will likely slow relative to 2007. Incremental earnings growth will come in the form of improving margins and share buybacks.

Investment in J&J offers consistency, reliability and perhaps safety in this volatile market. We consider the name a core holding. Our price target is $70.

Hold Countrywide Before Earnings

Countrywide Financial (NYSE: CFC) is expected to release its 1Q08 financial results on April 29, 2008. 4Q07 loss of $0.79 per share was substantially higher than our and consensus estimates. Credit quality further worsened during the quarter, with the NPAs rising 89% sequentially to 2.90% of total assets.

On the positive side, the Insurance segment earnings were up 15% sequentially and the capital market segment returned to profitability. We anticipate the credit and liquidity issues to continue to impact the earnings for the coming quarters.

Our six-month target price of $5.75 per share is based on the deal with Bank of America (NYSE: BAC), which is expected to close in 3Q08. Our recommendation on the shares remains unchanged at Hold.

Since the housing situation has continued to worsen, we anticipate higher provisions in the coming quarters, which will continue to affect the earnings. After reviewing the results, we are lowering our FY08 estimates to $0.38 per share. Though we were concerned about the possibility of the renegotiation of the deal due to continued problems at CFC; BAC's CEO reaffirmed that the deal will go through as planned.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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