Zacks Bull and Bear of the Day Highlights: Yum! Brands, Telmex, Nissan Motor Co., Moody's and Polycom

Business Wire, Oct 16, 2008

CHICAGO -- Zacks Equity Research highlights Yum! Brands, Inc. (NYSE: YUM) as the Bull of the Day and Telmex (NYSE: TMX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nissan Motor Co. (Nasdaq: NSANY), Moody's Corporation (NYSE: MCO) and Polycom (Nasdaq: PLCM).

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: Yum! Brands, Inc. (NYSE: YUM)

Yum! Brands, formerly Tricon Global Restaurants, Inc., was spun off from PepsiCo in October 1997. The company currently owns, operates, and franchises major fast food concepts, such as KFC, Pizza Hut and Taco Bell in more than 100 countries. Yum! Brands is the world's largest restaurant company with over 35,000 system restaurants.

Shares of Yum! Brands are a great way to gain exposure to China's booming economy as well as other fast-growing international markets, while investing in the only stable segment of the restaurant industry. Yum! Brands two overseas divisions (50% of 2007 revenue) are expanding rapidly. China and YRI are on track to grow operating earnings by an average CAGR [compound annual growth rate] of 20% and 10%, respectively, over the next five years.

Reinvigorating sales [after a well-publicized e. coli outbreak] was Taco Bell's recent product launches, including fruit smoothies and a value menu. KFC U.S. remains Yum's one weak spot, with an outdated menu. Key to improvement will be its 1H09 launch of a new grilled chicken line, the first step in Yum's strategy to add healthier and more portable menu items.

Bear of the Day: Telmex (NYSE: TMX)

Telefonos de Mexico, or Telmex, headquartered in Mexico City, operates in Mexico, the U.S., Puerto Rico, Brazil, Chile, Argentina, Peru, and Columbia. Most of the South American operations were acquired through the company's purchase of AT&T Latin America, which was closed in February 2004.

The key Mexican market remains stagnant, even though growth in the Internet division is still positive. Competition is also increasing in the Mexican market. We expect this trend to continue in the following quarters. The short-term outlook seems uncertain due to the recent global financial crisis in the U.S.

All considered, we are reiterating our current Sell recommendation on TMX. We believe that the stock is going to trade at an EV/2008 EBITDA between 4.5x and 5x, closer to Telesp in Brazil. Thus, our target price is US$21.50.

Latest Posts on the Zacks Analyst Blog:

Nissan Motor Co. (Nasdaq: NSANY)

Nissan Motor Co. manufactures and sells about 3.5 million cars and commercial vehicles annually in more than 190 countries. Some of its key brands include Altima (sedan), Sentra (sedan), Maxima (sedan), Quest (mini-van), Pathfinder (SUV), Xterra (SUV), Frontier (pick-up truck), Titan (pickup truck) and its luxury brand, Infiniti.

On October 12, Nissan and Al Dahana FZCO announced the establishment of a joint venture company Nissan Gulf FZCO (NGF) to enhance Nissan's marketing and sales strategy in key Gulf Cooperation Council (GCC) markets and introduce a full-fledged financial services platform through all Middle East and North African countries.

Nissan has targeted its Light Commercial Vehicles (LCV) business to be a key driver of growth. The company is focusing on emerging economies both for market expansion and for establishing a sourcing base. The company's recently announced a 5-year plan -- GT 2012 -- that focuses on quality leadership, zero-emission vehicles leadership, cost leadership, business and market expansion and a 5% revenue growth on an average during 2008-2012.

Moody's Corporation (NYSE: MCO)

Moody's has a solid franchise in the rating of debt instruments and has diversified itself with credit research and international growth. This has helped MCO offset declining ratings revenues, which fell 35% in the first half of 2008.

A major slowdown in residential mortgages and poor credit market conditions are responsible for this decline in Moody's stock price as investors have grown increasingly concerned about its outlook. Although we don't expect a major improvement in the Structured Finance business, we don't believe it will get meaningfully worse.

Moreover, the current credit crisis began in the fall of 2007, and we expect comparisons to get easier after the third quarter of 2008. On the negative side, Moody's is facing increased competition from its peers and is likely to face additional expenses related to increased regulation.

Polycom (Nasdaq: PLCM)

Polycom is a leading provider of voice/video conferencing solutions. The company is expected to report results at the close of business on October 15th.

Business enterprises on a global basis are facing restrictive travel budgets as economic weakness is evident. Under this scenario, Polycom's high-definition telepresence solutions have generated impressive growth in an increasingly interactive world. However, reduction in sales of the company's high-margin Network Systems products and intensifying competition in this segment remain concerning.