Stay Cautious on Morton's

Zacks senior restaurant industry analyst Ann Northrop, CFA downgraded shares of Morton's Restaurants (MRT) from Buy to Hold a month ago.  She currently is reiterating her recommendation on shares of the upscale steakhouse chain:

'Morton's reputation for serving world-class food and hospitality is driving strong sales, which, coupled with its stringent cost management, are providing superior restaurant returns compared to many of its competitors. Looking forward, we think, Morton's can grow earnings at a CAGR [compound annual growth rate] of 13%-15% over the next five years. This would be accomplished by adding 4 to 7 new units per year (5%-8% growth) and growing same-store sales by 3%-5% per year through incremental Bar 12-21 revenue, increased boardroom utilization and modest price increases.

'Trading in line with its upscale steakhouse peers, we think the shares deserve a premium to reflect MRT's less price sensitive corporate clientele (80% of its customers are on expense accounts). We note, however, that this extreme reliance on corporate spending, and moderate financial leverage (debt is 28% of capital) will work in reverse when the economy slows.'

'The main asset that sets Morton's apart, for which we would currently pay a premium is its less price-sensitive corporate customer base, which makes up 80% of the restaurant chain's sales. We think the loss in sales currently being experienced by the casual dining sector will work its way into the upscale segment as rising gas prices and mortgage payments continue to squeeze even well heeled consumers.'

Target $115 on Southern Copper

Zacks senior mining and metals analyst Paul Raman, CFA has seen Southern Copper's (PCU) price appreciation rise five times higher than when he initially recommended the shares, even considering the stock's recent pullback.  Here's why he still considers the metals producer a Buy:

'We have a positive outlook on Southern Copper's profit picture based on the favorable global demand for copper and lower interest rates. We think the company is in a very good position to expand production amidst higher-grade ores at its mines.

'Further, the company has undertaken various exploration projects, which will enhance the production capacity, once operational. This, in conjunction with high copper prices, provides a favorable backdrop for revenue. Based on these positive fundamental factors, we reiterate our Buy rating with a raised six-month target price of $115.00.

'Currently, shares of Southern Copper Corporation are trading at 8.7x our 2008 EPS estimate of $11.46, near the industry median of 9.5X. The company fundamentals remain strong and the stock pays an attractive dividend yield of 8.0%. We believe that as the copper prices are significantly strong it will improve the top-line.'

PMI Feels Housing Weakness

Here's why Zacks senior insurance industry analyst Neena Mishra is keeping a Sell recommendation on shares of PMI Group (PMI) at the present time:

'We are maintaining our Sell rating on the shares of PMI, due to our concerns for continued weakness in the housing and mortgage markets. PMI reported a net loss of $1.04 per diluted share in the third quarter of 2007, mainly due to steep rise in paid claims, loss adjustment expenses and addition to the reserves for loan losses.

'During the reported quarter, PMI's combined ratio worsened significantly while the claim rates and average claim sizes increased considerably. We expect higher losses in the fourth quarter, as the deterioration in housing market was worse than earlier projected. Our six-month target price of $9.00 per share equates to approximately 0.22 times our projected book value for June 30, 2008.'

Jamba Growth Priced In

Though its growth has been impressive, Jamba Juice (JMBA) shares have priced-in their positives at present, according to Zacks senior equities analyst Ann Northrop, CFA:

'Boasting a widely-recognized brand, Jamba Juice is poised to expand in an under-penetrated and growing health food market. In our view, over the next seven years, Jamba Juice is positioned to grow revenue at a mid-to-high teens CAGR through 10%-15% annual unit additions and comps in the 3%-5% range, while driving 25% EBITDA growth as it leverages G&A.