Jones Lang Making the Best of It

Jones Lang LaSalle, Inc. (JLL) is a leading full-service real estate firm that provides corporate, financial, and investment management services. The company caters to corporations and other real estate owners, users, and investors worldwide. Jones Lang has approximately 180 offices worldwide in about 700 cities and 60 countries.

The company badly missed our 2Q (ended June) estimates by $0.63 per share. Higher expenses and lower top line revenue growth caused the miss. The global commercial real estate market is rapidly deteriorating. Transaction volumes are declining due to a lack of available financing. As such, we expect revenue to continue trending down through the end of this year.

We still rate JLL a Hold. The company remains the best positioned global real estate services firm. We like the company's recent acquisitions, namely the Staubach company, which will help drive long-term growth. The current valuation is compelling after recent share price declines.

Avis Near-Term View Fuzzy

Avis Budget Group (CAR) is comprised of the vehicle rental operations of Avis Rent-A-Car, Budget Rent-A-Car, and Budget Truck Rental. Avis is the world's second largest general-use car rental business with over 2,200 locations in the United States, Canada, Australia, New Zealand and the Latin American/Caribbean region.

The near-term outlook for the Avis Budget Group is difficult to ascertain. The truck rental business is experiencing pricing pressure and the economy is weakening. Revenue enhancement and cost cutting initiatives have been implemented that should fuel significant financial improvements.

However, earnings visibility is limited, especially with a deteriorating economy. Also, historical valuation data is unavailable for Avis Budget Group. Management has lowered guidance for 2008 in view of rising fuel costs, weaker-than-expected enplanements, and lower commercial travel volumes. The Hold rating is maintained for Avis Budget Group.

Acorda Therapeutics Overvalued

Acorda Therapeutics (ACOR) is a biotechnology company whose mission is to develop and market therapies to restore neurological function in people with spinal cord injury (SCI), multiple sclerosis (MS) and related conditions of the nervous system. Core technologies developed by Acorda for SCI and MS have potentially broad applicability for other neurologic conditions.

The company released full data from its phase III MS-F204 clinical trial this month. The data is consistent with previous phase III data on Fampridine-SR showing improvement in walking speed and leg strength for the responder population.

The next step for Acorda is the NDA filing early in 2009. And, given the two positive pivotal trials, we believe the odds favor approval in 2010.

However, we remain unconvinced that Fampridine-SR will see significant use upon approval. And, at the current level, we believe Acorda's stock is overvalued and expectations for profitability and future cash flow are too high. Our target is $22.

Georgia Gulf Chasm Widens

Georgia Gulf Corporation (GGC) is a leading North American manufacturer and marketer of two integrated chemical product lines, chlorovinyls and aromatics. Its key products are chlorine, caustic soda, vinyl chloride monomer (VCM), polyvinyl chloride (PVC), cumene, phenol and acetone. Under the Royal Group brand, Georgia Gulf manufactures a complete line of custom and other vinyl-based building and home improvement products.

GGC overpaid for Royal Plastics, a supplier of housing products. The acquisition was entirely financed with debt, and the company is now in danger of violating debt covenants. The remaining product lines of the company are suffering from overcapacity. The company is expected to report losses in the near term on the back of rising feedstock and energy costs.

Demand for the company's products is also expected to remain weak due to the downturn in the US housing and auto markets. Moreover, the company may need to sell its assets to comply with the debt covenants. As a result, we have a Sell rating with a target of $2.50.

Raytheon a Buy, But With Risks

Raytheon Company (RTN) is the one of the largest aerospace and defense companies in the U.S., with a well-diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.

Raytheon offers investors strong order bookings and order backlog, double-digit organic growth, an improving balance sheet, growing cash flow, above industry average ROE, and one of the highest dividend yields in the industry. Solid performance in the first half of 2008 is expected to continue through the second half of 2009.

Going forward, however, concerns about long-term growth of defense spending in the face of continuing budget deficits and risks related to the company's program execution remain significant risks. Accordingly, we note a bias to outperformance and maintain our BUY recommendation on RTN common stock with a six-month target price of $63.50.