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Bull of the Day

We are upgrading Loews Corporation (L) to Outperform from Neutral on the back of strong first quarter results and initiatives taken to strengthen its hotel business. Loews' first quarter earnings comfortably surpassed the Zacks Consensus Estimate. Higher earnings at CNA Financial and higher parent company investment income were the positives.

Loews aims to strengthen its hotel business by doubling its hotel count within the next three to five years, and expects to triple the net income within the next three years. Elsewhere, Diamond Offshore continues to work on improving its fleet. Boardwalk's increased capacity and expansion projects, strong balance sheet with low leverage and adequate cash also bodes well.

Our six-month target price of $48.00 per share equates to about 15.5x our 2012 earnings estimate. This price target along with the annual dividend of $0.25 per share implies an expected total return of 20.7% over that period, which is consistent with our Outperform recommendation.

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