Zacks Bull and Bear of the Day Highlights: American Tower, General Motors, Investors Real Estate Trust, Napster and Ingram Micro

Business Wire, Sept 19, 2008

CHICAGO -- Zacks Equity Research highlights American Tower Corp. (NYSE: AMT) as the Bull of the Day and General Motors (NYSE: GM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Investors Real Estate Trust (Nasdaq: IRET), Napster (Nasdaq: NAPS) and Ingram Micro, Inc. (NYSE: IM).

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: American Tower Corp. (NYSE: AMT)

We reaffirm our Buy rating and the same valuation target for American Tower Corp (AMT), a leading operator of wireless communications towers in the USA, Mexico, and Brazil. Overall performance has been driven by substantial demand for more tower space to facilitate high-speed data services and mobile video, along with 3G and WiMAX technologies.

Recent initiatives in emerging markets of India will further solidify long-term growth capabilities. Improvements continue with respect to several of its financial metric benchmarks and the company has sequentially outperformed its peer group on an EBITDA margin basis. Significant operating cash flow reduces our concern regarding its leveraged balance sheet.

Our view towards the wireless tower industry remains positive and we believe American Tower is well positioned to capitalize on next-generation telecom network deployment opportunities.

Bear of the Day: General Motors (NYSE: GM)

General Motors is one of the largest automobile manufacturers in the U.S. and the world. Weak North American sales, falling production volumes, and rising raw material costs are increasing our concerns for the stock. Significant incentives to stimulate sales and keep inventories lean are eating into margins.

Furthermore, GM sales are hampered by poor resale values. The company is at a disadvantage compared to its competition owing to huge pension and health care costs. These issues compel us to rate the shares a Sell with a six-month target price of $7.00.

Our outlook for the Auto and Auto Parts Sector industry is Negative. The industry is very concentrated, with the top 8 auto companies having more than 90% of revenues and the top 50 auto parts companies having 80% of revenues (the top 4 tire producers have 75% of the market). The auto companies focus on the design, assembly and marketing, while the components come from the auto parts suppliers.

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Investors Real Estate Trust (Nasdaq: IRET)

Investors Real Estate Trust had a mediocre 1st quarter. The company missed our 1Q FFO [funds from operations] estimates by $0.04 per share, mainly due to higher than expected expenses.

Fundamentals noticeable declined in the company's office, retail and industrial segments, while improving in multifamily and medical. We think the company's diversified portfolio will perform better than sector specific REITs in a weakening economic landscape. On a P/FFO basis, the company is trading at an approximate 15% discount to office REITs, and a 20% discount to multifamily REITs in our coverage universe. The company is now trading at an approximate 8% premium to our NAV [net asset value] estimates due to our increase in market cap rate assumptions.

Napster (Nasdaq: NAPS)

After acquiring Pressplay online music service in May 2003, Napster updated its service with value-added features and launched itself as a paid service under the Napster brand name. The subscription service enables fans to freely sample the world's largest and most diverse online collection of music and experience the largest number of features. This service allows users to legally play, download, and burn (copy) online digital music legally.

The company has marshaled support for its service from leading device manufacturers. Furthermore, Napster is targeting the music-enabled cell phone market. The company has put together a demo of a wireless solution and is in discussions with major carriers. However, Napster faces stiff competition because many big players have concentrated on the emerging digital music market.

Ingram Micro, Inc. (NYSE: IM)

On September 16, Ingram Micro reduced its outlook for the third quarter. The company now expects sales of $8.3-$8.6 billion and EPS of $0.18-$0.23. This is down from its previous outlook of $8.5-$8.8 billion in sales and EPS of $0.31-$0.36. The management indicated that the economic softness that began in July and August has extended into September.

In our July 25 report, we noted that Ingram Micro could disappoint because of slowing economic growth in North America and Europe. Accordingly, we are reducing our estimates for 2008 and 2009. Even so, we think that Ingram Micro will be able to manage its operating costs in this difficult environment and deliver solid operating leverage over the long term.

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.