Our target price is $60.25.

Mararthon Going the Distance

Marathon Oil Corp.'s (MRO) second-quarter results came in weaker-than-expected as lower downstream margins more than offset good results from the upstream and integrated gas segments. Income from the refining segment amounted to $158 million, down from $1.25 billion a year earlier.

However, the upstream segment's profit more than doubled to $828 million. We are maintaining our Buy rating as we continue to believe that the company's attractive inventory of development projects will produce high single-digit volume growth going forward. Additionally, downstream projects, particularly the Garyville expansion and the Detroit Project are expected to further strengthen its refining assets.

Marathon plans to spend approximately $8 billion on capex, up approximately 79% from the $4.5 billion spent in 2007. The company hiked its E&P budget by over 27% to $3.2 billion, which includes an increase of nearly $600 million for production spending. A major portion of the new spending will be in the U.S., including Marathon's Droshky Project, which is scheduled to be developed in the Gulf of Mexico.

In addition to its strong pipeline of development projects, the company has made concerted efforts to expand its resource base through a combination of successful exploration activities as well as selective acquisitions. These efforts have created a well defined portfolio of development opportunities, which are expected to help the company achieve annual production growth in excess of the management's 7% guidance through 2012.

VimpelCom Maintaining Strength

Vimpel-Communications (VIP) delivered better-than-expected operating results in the most recent quarter, beating our estimates with strong revenue and customer growth across all its markets.

We continue to be intrigued by VimpelCom's success in increasing sales and retaining new subscribers on a recurring basis and maintaining strong operating margin. We believe synergies from the Golden Telecom acquisition will continue to drive revenue and earnings momentum. Additionally, untapped opportunities in Eastern European markets, coupled with fresh expansion initiatives in Southeast Asia, support our forecast for strengthening financials.

We reiterate our Buy rating based on financial metric estimates which we believe are attainable. VimpelCom is trading at 10.2x our 2008 EPADS estimates which is significantly below historical levels in previous quarters, although this metric remains at a premium to its major competitor, Mobile TeleSystems (MBT) (its closest Russian peer). VimpelCom's shares have lost approximately 50% of its value since a 52-week high reached in December 2007.

The stock price recently registered a 52-week low of $19.08, and is currently trading marginally above this level, offering a more favorable entry-point. Our revised six-month price target of $25 is based on 12x our 2008 EPADS estimate.

Procter & Gamble Won't Outperform

Procter & Gamble's (PG) management is committed to a growth strategy based on driving volume through product innovation and increasing penetration into developing markets and expanding profitability by focusing on higher margin categories. The plan is meeting with success in terms of topline expansion, volume growth, and higher earnings.

Though the Gillette acquisition was accretive to earnings in fiscal 2008, the gross margin was negatively impacted by increased commodity and energy costs. The Hold recommendation is maintained.

Despite two periods of restructuring, Procter & Gamble has traded in a solid P/E multiple range of 17 to 25 over the last 15 years, reflecting the company's higher-than-average growth profile. We do not expect Procter & Gamble stock to outperform until the current impediments to margin improvement abate, specifically, increased promotional spending to combat recently intensified competition and higher raw material costs. The target price of $78.75 is based on a 22.5 P/E on trailing 12-month earnings.

Accuray Not Cutting Too Deep

Accuray (ARAY) has developed the first and only commercially available intelligent robotic radiosurgery system, the CyberKnife System, designed to treat solid tumors anywhere in the body as an alternative to traditional surgery. After initially receiving marketing approval in the U.S., the company received additional marketing clearance in the international markets for the system.

The CyberKnife procedure is well tolerated.