Zacks Analyst Blog Highlights: GameStop, Sony, AutoZone, Inc., Esterline Technologies and Westell.

For Immediate Release

Chicago, IL – June 1, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: GameStop (GME - Analyst Report), Sony (SNE - Analyst Report), AutoZone, Inc. (AZO - Analyst Report), Esterline Technologies (ESL - Snapshot Report) and Westell (WSTL - Analyst Report).

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Here are highlights from Friday’s Analyst Blog:

GameStop CFO: GME a Bargain

According to an SEC filing dated May 27, GameStop (GME - Analyst Report) CFO David Carlson purchased 25,000 GameStop shares for $562,000, which comes out to an average price of $22.48. Mr. Carlson now owns a total of 194,828 GameStop shares.

That is a pretty substantial purchase, and it should put GameStop's recent sell-off into perspective. It was just last week that GameStop reported solid first quarter results, but disappointed investors with its second quarter outlook. Investors (mistakenly) viewed management's tepid second quarter outlook as evidence that even GameStop could not escape the reach of the slowdown in consumer spending. The stock sold-off hard on the news.

However, we would like to point out that GameStop's outlook had more to do with the video game release schedule than with overall economy. Video game publishers decided to push back the release dates for their most promising games until second half of the year. This left the cupboard bare for the second quarter.

Most of the time investors should be skeptical of a retailer that says to look past its current results and point to a second half recovery. This is not one of those times. The second half of this year the release schedule looks strong, with titles including Batman Arkham Asylum, Madden NFL 2010 and Modern Warfare 2. What's more, there is a good chance that Sony (SNE - Analyst Report) finally cuts the price of its PlayStation 3, which would stimulate more demand for consoles and games.

AutoZone – Buying Opportunity

AutoZone, Inc. (AZO - Analyst Report) is a leading retailer of automotive parts and accessories. The company has a significant cash flow and plans to expand its square footage growth. AutoZone has maintained a mid-single-digit square footage growth rate by opening new stores every year.

Falling gas prices are helping the company to improve same-store sales. In the second quarter of fiscal 2009, domestic same-store sales witnessed a 6% improvement compared to a 1.5% fall in the previous quarter and a 0.3% decline in the same quarter of fiscal 2008.

The company is aggressively repurchasing its shares. With significant cash on its balance sheet, the company can repurchase about 8% of its shares every year. Each 1% reduction in shares outstanding increases earnings growth by 3%. We rate the shares a Buy, with a six-month target price of $185.00.

Esterline Outlook Over a Cliff

Esterline Technologies (ESL - Snapshot Report) reported not-so-bad results for its second quarter of fiscal 2009. What was shocking to some, however, was its outlook for the balance of the fiscal year.

Before we get into the details of the quarter, let me explain what was disturbing about the Company’s latest pronouncement. Last quarter, ESL’s management opined that fiscal 2009 earnings would probably be in a range of $3.70 to $3.90 per share. This quarter, ESL’s management lowered its EPS range estimate for the year to $3.00 to $3.20. The decline between the mid-point of those projections is over 18%.

One reason for the reduction: incoming orders in first quarter amounted to $370.2 million, while incoming orders in the second quarter totaled $306.1 million, a sequential decline of over 17%. Put another way, organic incoming orders in Q2-09 were off by $152.8 million, which is a year-over-year decline of over 19% from the $788.1 million booked in Q2-08. Any way you look at it, business is softening.

Westell New Management Assessed

Westell (WSTL - Analyst Report), a provider of broadband access products and conferencing services, recently declared financial results. Earnings were essentially in-line with our earlier quarterly earnings forecast. The company also announced a new CEO and CFO, along with the appointment of two independent board members.

For full fiscal 2009, total revenue was $170.4 million, down 18.3% year-over-year. Gross margin was 30%, remaining flat with margins attained in fiscal 2008. Adjusted diluted EPS (excluding extraordinary items) equated to a loss of $0.16 per diluted share in fiscal 2009 compared to a loss of $0.04 per diluted share in fiscal 2008. At the end of fiscal 2009, Westell had approximately $46.1 million of cash and short-term investment and no outstanding debt on its balance sheet.

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