Zacks Analyst Blog Highlights: NuStar Energy, L.P., Telefonica S.A., Kinder Morgan Energy Partners, L.P., Highwoods Properties and Semiconductor Manufacturing International Corp

Business Wire, July 10, 2008

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: NuStar Energy, L.P. (NYSE: NS), Telefonica S.A. (NYSE: TEF), Kinder Morgan Energy Partners, L.P. (NYSE: KMP), Highwoods Properties (NYSE: HIW) and Semiconductor Manufacturing International Corp (NYSE: SMI).

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Here are highlights from Wednesday's Analyst Blog:

Ahead of Earnings, Buy NuStar

We are maintaining our Buy recommendation and earnings estimates for NuStar Energy, L.P. (NYSE: NS) units ahead of the partnership's second-quarter results. We continue to like the partnership for its diversified asset base, strong distribution-growth prospects and attractive valuation.

The inclusion of the asphalt business in the asset mix further adds to the partnership's diversification and growth prospects. A strong pipeline of organic growth projects and contribution from acquisitions provide the partnership with an above peer group average distribution coverage ratio. We estimate that the partnership can sustain distribution-growth in the 8%-9% annual range over the next few years.

Telefonica Strength Accounted For

We maintain our Hold rating for Telefonica S.A. (NYSE: TEF), the largest telecommunications company in Spain and Latin America. The company has been delivering strong quarterly results with improvements driven by strong performance in European and Latin American regions and healthy business momentum across wireless, broadband and Pay TV operating segments.

The company continues to generate strong free cash flow and offers a respectable dividend payout. However, the environment remains challenging with strong competition and we are exercising caution about the company's aggressive acquisition strategy, along with the integration process following such initiatives. Furthermore, there is the need to consider the currency exchange rate, which is associated with the Euro versus U.S.D as the dollar may be reaching its lower inflection point.

Hold Kinder Morgan Pre-Earnings

We are maintaining our Hold recommendation on Kinder Morgan Energy Partners, L.P. (NYSE: KMP) units ahead of the partnership's quarterly results. Strength across all of its business lines drove the first quarter. Importantly, it also announced a 16% year-over-year increase in quarterly distribution to the annualized run rate of $3.84 per unit.

Looking forward, with over $3 billion of organic projects beginning to come online over the next few years, we see favorable long-term growth profile for KMP. However, we believe these positives are already reflected in its premium valuation relative to the peer group and do not foresee much upside from current levels.

Downgrading Highwoods to Hold

Highwoods Properties (NYSE: HIW) is a fully integrated, self-administered real estate investment trust (REIT) that owns or has management interests in office, industrial, retail and service center properties, including development projects and apartment units.

The company's core FFO [funds from operations] increased 17% in 1Q08 vs. 1Q07. Operations are holding steady as occupancy and rents are slowly rising in many of the company's markets. The company continues to focus on higher yielding development which will drive long-term NAV [net asset value] growth.

Chinese Semi SMI Fairly Priced

Semiconductor Manufacturing International Corp. (NYSE: SMI) is a Chinese semiconductor foundry company with multiple integrated chip wafer fabrication plants. March quarter top and bottom-line missed the consensus estimates.

The company is receiving very favorable tax treatment from the Chinese government, along with other incentives to boost investment. Looking at other fab's product mix, it would appear SMI is well-positioned for further growth.

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