CAB a Hold on Volatility

The following excerpts give us a clear idea why Zacks senior retail industry analyst Robert Plaza, CFA continues to remain neutral on Cabela's, Inc. (CAB), the direct marketing company:

'Cabela's has been unable to escape the weak consumer spending environment. As a result, the company is offering more discounts in order to drive store traffic and sales. This is hurting Cabela's profit margins, and we are reducing our earnings estimates to reflect lower margins in the next few quarters.

'Even so, the company's multi-channel strategy and long-term focus points to solid long-term growth potential. This bullish view, however, is tempered by the risks associated the company's rapid store expansion, weak spending environment, and growing competitive pressures.

'CAB shares are trading at 9.7x our 2008 EPS estimate. While this valuation appears to be attractive, we prefer to remain neutral on CAB shares until the company's earnings revisions begin to stabilize. Our target price of $14 is 10x our 2008 EPS estimate.

'We continue to rate the stock a Hold. Cabela's is scheduled to report its fourth quarter results on February 21.'

Mildly Bullish on American Electric

A Hold recommendation has recently been issued to public utility company American Electric Power Co., Inc. (AEP) by Zacks utilities analyst Jon Kolb. Here's what his latest update had to say:

'Consistent performance at the East Regulated segment, new 765-kV transmission lines at PJM, ongoing debt reduction, new power supply contracts in ERCOT, and the favorable approval of rate changes from the PUCO and PUCT are expected to drive modest earnings growth at AEP over the near-term. However, the unfavorable order on Appalachian Power's base-rate filing, higher operating & maintenance expenses and uncertainty surrounding pending regulatory cases collectively continue to weigh on the stock.

'Price appreciation to our near-term valuation target, coupled with the stock's recently increased $0.41 per share quarterly cash dividend which we deem sustainable and secure given reasonable projected earnings payouts of 51% and 49%, respectively, of our 2008 and 2009 EPS estimates represents annualized total return potential of 13.7%.

'Accordingly, with a mildly bullish outlook, modest earnings growth and an attractive dividend yield, we maintain our market-neutral Hold recommendation on AEP common stock with a six-month target price of $43.25, or 13.6x and 12.9x, respectively, our 2008 and 2009 EPS estimates.'

Hold Becton Dickinson

Zacks senior medical technology sector analyst Gregory Aurand, CFA has restated his Hold rating in his latest update on medical suppliers Becton, Dickinson and Company (BDX). We excerpted the following details:

'BDX's first quarter results beat our estimates on better revenues. SG&A expense was lower than expected but gross margin declined 140 bps and, for 2008, management now expects gross margin of 51.5%, about 20 bps below the 2007 level. We are increasing our 2008 revenue estimates on management's updated outlook, and our EPS estimates also increase on greater revenues but with lower operating margin improvement.

'BDX's first quarter results beat our estimates on better revenues. SG&A expense was lower than expected but gross margin declined 140 bps and, for 2008, management now expects gross margin of 51.5%, about 20 bps below the 2007 level. A lower tax rate also helped the quarter. Management revised its 2008 revenue growth guidance upward to approximately 10%, with 2.5%-3% coming from FX.

'Management also revised its 2008 EPS outlook to $4.26-$4.34 from $4.22-$4.30 (up 11-13%). GeneOhm looks to be a stronger growth track and we are increasing our 2008 revenue estimates on the updated outlook. Absent acquired growth and FX benefit, organic revenue growth remains in the 6%-8% area. Acquisitions and other uses of cash, including stock buybacks, will be needed to drive sustainable low double-digit or low teens EPS growth. Nonetheless, the company's diversified and consistent performance is deserving of a premium, in our opinion.

'At the current price, shares of Becton, Dickinson and Company trade at 20x our fiscal year 2008 estimate of $4.30, a P/E premium to the average 18x 2008 multiple of medical supplies peers and roughly a 10% premium to the group average 1.6x 2008 P/E/G. Our target price moves to $87, an approximate 15% group P/E premium, equivalent to 20x our 2008 EPS estimate, and roughly a 1.8x 2008 P/E/G, a roughly 10% premium to comparables.'

PAC a Buy for Short-Term

Zacks senior Latin American markets analyst Claudio Freitas, CFA has recently upgraded the shares of infrastructure company Grupo Aeroportuario del Pacifico, S.A. de C.V. (PAC) from a Hold to Buy.