Zacks Analyst Blog Highlights: Apartment Investment & Management, RightNow Technologies, King Pharmaceuticals, Deutsche Bank AG and 51job

Business Wire, May 16, 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: Apartment Investment & Management (NYSE: AIV), RightNow Technologies (Nasdaq: RNOW), King Pharmaceuticals, Inc. (NYSE: KG), Deutsche Bank AG (NYSE: DB) and 51job (Nasdaq: JOBS).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579

Here are highlights from Thursday's Analyst Blog:

AIMCO Getting Scorched in Florida

Multifamily fundamentals are holding up in most markets across the U.S. Landlords are slightly raising rents while maintaining high occupancy levels. On a portfolio-wide basis, Apartment Investment & Management (NYSE: AIV), or AIMCO registered decent same-store revenue and NOI [net operating income] increases in most regions.

The company struggles with heavy maintenance cap-ex, tight dividend coverage and exposure to weakening markets in Florida cause us to continue our Hold rating. In addition, there are signs that apartment fundamentals are declining due to the state of the economy. Rent growth is slowing in many areas of the country. There are too many unsold condos and single family homes that are being put into the rental market, which will continue to have a negative effect on operations.

Based on 2008 FFO estimates, the company is trading at an approximate 26% discount to the sector weighted averages and a 25% discount to our calculate NAV. We do expect slight improvement in operations throughout the next six months as the company continues to realize above-average growth in its core markets. Although, we think the company will continue to have a difficult time in Florida and other sun-belt markets which have too much supply, which will continue to negatively affect overall earnings.

Hold-Rated RightNow Ests Upped

RightNow Technologies (Nasdaq: RNOW) reported better than expected results for Q1:FY08 with revenue and GAAP earnings exceeding our estimates. License revenues were slightly below our estimates with recurring revenues growing 27% year over year. Service revenues grew by 42% year-over-year.

Management's guidance for the second quarter of 2008 and FY08 has led us to slightly increase our revenue expectations while reducing our loss expectations on a GAAP basis. We do not expect the company to reach GAAP break-even before 2009.

We continue to rate shares of RNOW a Hold as the recent spurt in stock price appears to have already factored in the Q1 results and FY08 guidance. We have set a target price of $13.50 at 2.3x EV/2008 sales estimate.

King Pharma Still in Decline

King Pharmaceuticals, Inc. (NYSE: KG) is a vertically integrated pharmaceutical company that focuses on developing and marketing branded prescription pharmaceutical products. Most of the company's key products are either facing increased competition or generic threat.

Additionally, we are concerned about declining prescription trends for most of the company's products. While King has several candidates in its pipeline, we do not think that these products will be sufficient to compensate for the loss of revenue that will take place with the genericization of key products over the next few years. We believe that generic threat and mounting competition will continue to hinder both top- and bottom-line growth going forward.

Target Upped on Hold-Rated DB

We are continuing our Hold on Deutsche Bank AG (NYSE: DB), but raising our target price to $118. DB posted a first quarter net loss before nonrecurring items of 985 million, compared to net earnings of 1,924 million in the year-ago quarter. This was in line with the April 1 pre-announcement that called for 2.7 billion in writedowns related to leveraged loans, commercial real estate, and residential mortgage-backed securities.

We are cutting our 2008 EPADS estimate to $8.00 from $14.15 and initiating our 2009 estimate at $14.15. Though DB's results should be bolstered by improved efficiencies and acquisitions, headwinds include problems stemming from more dislocations in the US subprime mortgage and other credit markets. DB recently increased its annual dividend by 13%.

Chinese JOBS Still Impressive

On May 13, 51job (Nasdaq: JOBS) announced first quarter results. Its net profit margin declined due to higher sales & marketing expenses and a higher tax rate. Its EPS missed the market consensus, while revenue exceeded expectations.

51job continues to have the highest brand recognition both in the online and offline recruiting market in China. Moreover, China's prosperous economy will continue to boost the recruiting market. Overall, we believe 51job is well positioned to leverage this market opportunity in China. Therefore, we are maintaining the Buy rating for the stock.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.