Zacks Bull and Bear of the Day Highlights: Coca-Cola FEMSA, Liberty Property Trust, Marsh & McLennan, Energizer Holdings and Smith & Nephew

Business Wire, May 1, 2008

CHICAGO -- Zacks Equity Research highlights Coca-Cola FEMSA (NYSE: KOF) 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 Marsh & McLennan (NYSE: MMC)), Energizer Holdings, Inc. (NYSE: ENR) and Smith & Nephew (NYSE: SNN). 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: Coca-Cola FEMSA (NYSE: KOF)

We are keeping our Buy recommendation on Coca-Cola FEMSA S.A. de C.V. The company posted better-than-expected results for the second, third and fourth quarters of 2007. The results in South America were particularly impressive and Mexican results showed a considerable improvement after some difficult quarters. Additionally, the short-term outlook for Latin American economic growth remains positive, despite the difficult economic environment in the U.S. and its effects on Mexico.

The company also benefited from the strength of most Latin American currencies, a trend that should prevail in the following quarters. Finally, KOF has been reducing net debt, a necessary step to reduce financial costs and increase confidence.

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

LRY reported 1Q08 FFO of $0.80 per share, $0.01 above our estimates and consensus. Operations including are holding up relatively well in the company's core portfolio although overall vacancies are increasing. The company has an attractive yield, now over 7%, although the dividend is barely being covered with operating cash. We expect rental rates to remain flat through 2008, as the company has assets in office markets that have high vacancies.

Office and industrial markets are weakening throughout the US due to a faltering economy. Liberty has a large development pipeline that is only mildly pre-leased, and poses risk should the economy continue to soften in 2008.

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Marsh & McLennan (NYSE: MMC)

Marsh & McLennan plans to release its 1Q08 earnings results on May 7, 2008 with a conference call scheduled for the same morning. 4Q07 operating earnings from continuing operations came in at $0.26 per share, compared to $0.39 per share in the prior-year quarter. While the consulting business continues to exhibit strong performance, the overall results have been affected in the recent quarters by the ongoing poor performance in the insurance broking business.

While we are optimistic about initiatives being taken by the new Management team, we do not anticipate any significant improvement anytime soon, due to the current pricing environment. Ahead of 1Q08 earnings release, we are slightly moderating our estimates for FY08 and FY09 and setting our six-month target at $30.00 per share. We are maintaining our Hold rating on the shares of MMC at current valuation.

Energizer Holdings, Inc. (NYSE: ENR)

Energizer Holdings is experiencing top-line growth both through organic growth in the razor blade and battery businesses, and through the acquisition of Playtex. In order to complete the Playtex acquisition and refinance existing Playtex debt, Energizer's debt level significantly increased, which could impair the company's financial condition. At the end of calendar 2007, long-term debt stood at $2.69 billion versus $1.37 billion in the year-ago period.

The balance sheet is highly leveraged with debt being 77% of total capitalization. With the Playtex acquisition, debt rose above the critical 3.5 times cash flow level, which required (by debt covenant) a 75 basis point interest rate penalty. Energizer does not pay a dividend. Therefore, the share repurchase program has been curtailed as management concentrates in lowering the debt level. Guidance for integration savings, originally estimated to be $57 million, has been raised to $70 million.

Smith & Nephew (NYSE: SNN)

We are maintaining a Hold recommendation on Smith & Nephew, PLC prior to the first quarter results due on May 1. The company is benefiting from its Earnings Improvement Program (EIP) and the recent stock buy-back should provide support to the stock. SNN reported Q4 and full year results.

For the full year, revenue of $3.4 billion, up 10% on a comparable basis with trading profit at $706 million up 17%. As a result of the company's Earnings Improvement Program, there was over 1% operating margin improvement.

SNN's Orthopaedic Reconstruction revenue growth of 13% leads the market for the 5th consecutive year with Orthopaedic Trauma and Clinical Therapies revenues up 13% as the company's EXOGEN Ultrasound Bone Healing System outpaces the market. In Endoscopy, due to investments made outside the US, revenues were up 10%. In Advanced Wound Management, trading margin was up 120 basis points as a result of the restructuring of this division. The EPS increased 15% to 52c ($2.60/ADS) which is exactly in line with our forecast.

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

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