Zacks Bull and Bear of the Day Highlights: Jabil Circuit, Hercules Technology, CB Richard Ellis Group, Jones Lang Lasalle and Arrow Electronics.

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Jan 05, 2011, 02:44 ET

CHICAGO, Jan. 5, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Jabil Circuit (NYSE: JBL) as the Bull of the Day and Hercules Technology (Nasdaq: HTGC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on CB Richard Ellis Group Inc. (NYSE: CBG), Jones Lang Lasalle Inc. (NYSE: JLL) and Arrow Electronics, Inc. (NYSE: ARW).

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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Jabil Circuit's (NYSE: JBL) first quarter 2011 results were above the Zacks Consensus Estimate, driven by strong top-line growth and better-than-expected operating margins.

We expect Jabil to achieve strong top-line growth with operating margin leverage and robust earnings momentum over the long term, riding on new business wins, growth in IT enterprise spending, a recovery in end-market demand and transition to higher margin business. The company provided upbeat second quarter guidance as it is experiencing stable business trends and growth across all business areas.

We have raised our revenue and EPS estimates by 4.7% and 15.3%, respectively, for fiscal 2011. However, intense competition and a slowdown at Jabil's customer Cisco (15% revenue share in 2010) are areas of concern. We upgrade the stock to Outperform and raise our target price to $24.00.

Bear of the Day:

We are downgrading our recommendation on Hercules Technology (Nasdaq: HTGC) to Underperform from Neutral based on its rising expenses and weak fundamentals.

Third quarter distributable net operating income came in ahead of the Zacks Consensus Estimate but remained below the prior-year quarter. Increased operating expenses and higher net realized loss on investments primarily pulled back the results.

Despite the capital market disruption and the sluggish economic recovery, a steady pace of new investments by venture capitalists is being viewed. As a result of this, new investment opportunities are expected, though we remain cautious about the company's investment and credit management strategies.

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DC Office Vacancies Decline

According to a report published by CB Richard Ellis Group Inc. (NYSE: CBG), the world's largest commercial real estate services firm (on the basis of 2009 revenues), office vacancy rates in Washington DC declined to 9.8% at year-end 2010 from 12.0% at the beginning of the year. The Washington DC market also observed record net absorption of 4.3 million square feet in 2010.

The recent findings by CB Richard Ellis reveal that office building sales soared significantly in 2010, with transaction value up 175% from 2009 to $4.8 billion. The prices for premium assets in the District exceeded $800 per square foot in 2010.

The report further stressed that Washington DC was one of the most attractive global real estate markets and would be supply constrained in 2012 and beyond with investors vying for prized assets.

The development marks a significant about-face from early 2010, when most of the real estate companies were forced to lower rents to attract and keep tenants. In addition, tenants then were asking for and getting more concessions in the form of free rent and capital improvements.

The erstwhile market fundamentals reflected a demand-supply imbalance triggered by the slowdown in demand due to the prolonged economic downturn and an oversupply due to bankruptcies of large companies.

CB Richard Ellis is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management.

The company has a broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets that enables it to operate as a single-source provider of real estate solutions.

CB Richard Ellis offers a range of services to occupiers, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estate assets globally under the CB Richard Ellis brand, and provides development services under the Trammell Crow brand.

We maintain our Neutral rating on CB Richard Ellis, which presently has a Zacks #2 Rank translating to a short-term Buy recommendation and indicates that the stock is expected to outperform the overall U.S. equity market for the next 1−3 months. We also have a Neutral rating and a Zacks #3 Rank (short-term Hold) for Jones Lang Lasalle Inc. (NYSE: JLL), a competitor of CB Richard Ellis.

Arrow Gets Nu Horizons

Arrow Electronics, Inc. (NYSE: ARW) recently completed the acquisition of Nu Horizons Electronics for $7.00 per share, or a total of $130 million.

Headquartered in Melville, NY, Nu Horizons Electronics is a leading global distributor of advanced technology semiconductor, display, illumination and power solutions to a wide variety of commercial original equipment manufacturers (OEMs) and electronic manufacturing services providers (EMS). The company employs 650 people.

Nu Horizon generated $671 million of sales in fiscal 2010. The transaction is expected to be accretive to earnings by 5 to 10 cents in the first full year of operations. The acquisition will enable Arrow to expand its global capabilities in the emerging Asia-Pacific region.

Nu Horizons has sales facilities in more than 50 locations across North America, Asia and Europe. The company caters to a wide variety of end-markets including industrial, military, networking, telecommunications and data communications.

Earlier, Arrow acquired Mississippi-based Intechra, which provides comprehensive end-to-end IT asset disposition services.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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