El Paso Corp. a Strong Buy

El Paso Corporation (EP) is a major player in both the natural gas transmission and exploration and production businesses within the energy space. The company has organized its operations around regulated and non-regulated businesses.

We are maintaining our Buy recommendation on El Paso Corp. as the outlook from both its core pipeline and E&P businesses have strengthened. Its pipeline businesses boasts an industry-leading $8 billion in project backlogs with exposure to major gas consuming and producing regions and an impressive growth profile relative to its peers. Its E&P business continues to improve from a cost stand point from the effects of the asset high grading efforts via the People's acquisition.

The low risk reserve adds from infill drilling as well as its exploratory efforts in the Haynesville and Cotton Valley formations should give the company a substantial platform for production growth over the long term.' Our target price is $24 per share.

Xilinx Should Continue to Thrive

We believe Xilinx (XLNX) is a play on the secular trend of PLDs (programmable logic devices) replacing ASICs (application-specific integrated circuits). PLDs do not have high development costs. The hallmark of a PLD is its flexibility. When designs have to be altered, they can be re-programmed and brought to market faster. Changes can be made even when the devices are in the field.

For Q2 of fiscal 2009, management expects revenues to be up 1% to down 3% sequentially. September is a seasonally weak quarter for the company. Gross margin is expected to be in the range of 63%-64%. We have adjusted our FY2009 estimates accordingly. We continue to rate Xilinx a Buy.

Accordingly, we are maintaining our target price of $30, reflecting our belief that Xilinx is well positioned to start regaining market share this year. This is derived by applying a target P/E multiple of 20.5x to our fiscal year 2009 EPS estimate. We consider our choice of target multiple to underscore the attractiveness of the company's valuation.

Vodafone Grows Subscribers

We maintain our Buy recommendation for Vodafone (VOD), the largest revenue generating international wireless carrier. The company's recent operating results are highlighted by healthy increases in mobile data usage and growth in subscribers across consolidated segments (notably in the emerging markets), offset by contraction of organic service revenue in core European markets.

Meanwhile, momentum is also building with deployment of Vodafone's 3G wireless services and the company's expansion initiative in emerging markets across Asia, Eastern Europe and Africa, primarily through acquisitions. Additionally, an attractive dividend payout and share repurchases emphasize the desire for improved shareholder return and support our valuation forecasts.

While management's recent revenue guidance for fiscal 2009 was less encouraging due to macro-economic conditions in core European market segments, net earnings performance is expected to accelerate fostered by restructuring and cost-cutting initiatives, along with favorable exchange rate movements.

Anindya Barman contributed to this report.