For Immediate Release

 

Chicago, IL – Feb. 13, 2009 – Zacks Equity Research picks Hot Topic (Nasdaq: HOTT - Analyst Report) as Bull of the Day and LoopNet, Inc. (Nasdaq:LOOP) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on Bank of America (NYSE: BAC - Analyst Report), Citigroup (NYSE: C - Analyst Report) and Wells Fargo (NYSE: WFC - Analyst Report).

 

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

 

Bull of the Day

 

We are initiating coverage of Hot Topic (Nasdaq: HOTT - Analyst Report) with a Buy rating. Hot Topic is one of the few specialty retailers with positive comp-store sales and the ability to expand its profit margins.

The popularity of the movie Twilight, which is about a teenage girl falling in love with a vampire, has been driving Hot Topic's recent results. Going forward, we think the retailer's strategy to increase its in-store music events, where bands have autograph sessions or play their music for Hot Topic shoppers, will pick up the slack when Twilight sales begin to taper off.

We are forecasting Hot Topic's long-term earnings growth rate will be 15%. In the short-term, we are forecasting earnings growth of 20%. As such, we believe the stock has upside potential to $11.00, or about 20x our fiscal 2009 EPS estimate of $0.53. Hot Topic is scheduled to report 4th quarter results on March 19.

 

Bear of the Day

 

We reiterate our Sell rating on shares of LoopNet, Inc. (Nasdaq:LOOP) following the release of Q4 results. Although the company owns the leading online commercial real estate marketplace, we believe that a challenging near-term operating environment will curtail share price appreciation.

 

Continuing macro-economic challenges will likely put stress on the commercial real estate sector, in our opinion, as slower economic growth combined with tight access to debt capital may limit transaction activity.

 

Various key operating metrics have weakened in recent quarters, and we believe that a lower multiple is appropriate at this time.

Recent Analysis from the Analyst Blog

 

And If They Fail the "Stress Tests"?

 

With the condition of many banks (including many so-called "too big to fail" ones) very weak, tangible equity levels already far below the historical norms, and non-performing assets and net charge-offs rising at an alarming pace with the deterioration in the economic situation, we would not be surprised to see a large number of institutions failing these stress tests.

The question the regulators would face then: do they continue to bail out these institutions with the taxpayers' money, or do they shut them down to limit the cost to taxpayers? The regulators may ask these banks to raise additional private capital, but that is not going to be easy, and the banks would then be forced to return to the government.

For the smaller banks, closure may be the only answer. Thirty-four banks have already failed in the past 12 months, and many more banks are on the verge of failure. But the real challenge would be as to how to deal with larger, especially "too big to fail" banks like Bank of America (NYSE: BAC - Analyst Report), Citigroup (NYSE: C - Analyst Report), Wells Fargo (NYSE: WFC - Analyst Report), etc.

In the end, the Government may end up owning a large stake (and control) in banks which are functionally insolvent and cannot survive without Government support. It may not be termed as nationalization for political reasons, but effectively that seems to be the only answer as of now.

 

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About the Bull and Bear of the Day

 

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

 

About the Analyst Blog

 

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

 

About Zacks Equity Research

 

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

 

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

 

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Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

 

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

 

 

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Read the full analyst report on HOTT

Read the full analyst report on LOOP

Read the full analyst report on BAC

Read the full analyst report on C

Read the full analyst report on WFC