Zacks Bull and Bear of the Day Highlights: Sara Lee, eBay, Infosys and Charles Schwab

Business Wire, Jan 7, 2008

CHICAGO -- Zacks Equity Research highlights Sara Lee Corp. (NYSE: SLE) as the Bull of the Day and eBay, Inc. (Nasdaq: EBAY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Infosys (Nasdaq: INFY) and Charles Schwab (Nasdaq: SCHW). 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 Sara Lee Corp. (NYSE: SLE). The five-year Transformation Plan should benefit Sara Lee in the long term but over the first two years, the project provided little earnings visibility. However, the company in now in the third year of the plan and the brand building process is proving to be successful. The company is focused on its more attractive product lines, and operating margin is beginning to expand. Quarterly earnings comparisons in fiscal 2008 are expected to be positive. Hence, the Buy recommendation is maintained.

Bear of the Day:

Our Bear of the Day recommendation is for eBay, Inc. (Nasdaq: EBAY). We are downgrading EBAY shares from Buy to Hold and lowering our target price from $50 to $35, which is about 21x our 2008 EPS estimate. While the company should continue to produce solid growth thanks to the strength of its business model, PayPal, and international opportunities, these positives are already reflected in EBAY shares. What's more, we are concerned with slowing consumer spending, increasing competition and the potential for its profit margins to contract. The current environment for consumers will most likely prevent eBay from beating our quarterly earnings estimates for 2008. As a result, we expect EBAY shares to perform in line with the overall market this year.

Analyst Blog:

The shares of Infosys (Nasdaq: INFY) are presently trading at roughly 25.5x our fiscal year 2008 EPADS estimate of $1.98. While our FY2008 estimates call for year-over-year revenue and earnings growth of 34.7% and 31.7%, respectively, we believe the company is on target with a slew of large-scale and longer duration BPO deals even as competition intensifies for larger deals and growth on a larger scale becomes more difficult. We are also concerned that there will be a supply problem in hiring new and experienced consultants as more and more business move into India, and there are only so many skilled workers to hire.

Fundamentals at Charles Schwab (Nasdaq: SCHW) appear to remain strong (although the sale of UST has muddied the comparisons significantly), and there remains significant scarcity value in the stock. Based on continued strong performance, we are raising our six-month price target to $26.50 per share. Our $26.50 price target (up $2.50) equates to 21 times our EPS estimate for FY2008. We view the $0.20 annual dividend as secure, implying an 8.2% expected total return over the period, consistent with our Hold rating.

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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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