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The Zacks Analyst Blog Highlights: Tiffany & Company, United Continental Holdings, Boeing, Delta Air Lines and AMR

TIF UAL BA DAL

 ZacksTrade Now

For Immediate Release

Chicago, IL – December 2, 2011 – 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 Tiffany & Company (TIF - Analyst Report), United Continental Holdings Inc. (UAL - Analyst Report), Boeing Co. (BA - Analyst Report), Delta Air Lines Inc. (DAL - Analyst Report) and AMR Corporation .

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Here are highlights from Thursday’s Analyst Blog:

Tiffany Loses Some Sparkle

Tiffany & Company (TIF - Analyst Report) lost a little shine due to sluggish sales witnessed in the Eastern U.S. and Europe that highlighted its vulnerability to the turbulent and dwindling economy. Coming to the facts, we observe that sales in Europe climbed 19% during the third quarter of 2011, following an increase of 32% in the second quarter, whereas sales in the Americas grew 17% compared with 25% in the previous quarter.

We also noted that Tiffany, a high-end jewelry designer, manufacturer and retailer, raised its fiscal 2011 earnings projection on the back of better-than-expected third quarter results but reiterated its top-line guidance. The unchanged revenue guidance was enough to dash the hope of investors, who were looking for some sales pick-up this holiday season.

Further, a lower-than-expected earnings forecast for the fourth-quarter of 2011, which comprises the holiday season, also took away some sheen from the stock that fell approximately 9% since November 28.

All these compelled us to revisit our long-term view. We recently downgraded our recommendation on Tiffany to Neutral with a price target of $71.00. Earlier, we had an Outperform rating on the stock. Our approach on the company is bit cautionary given an unpredictable economic environment.

FAA Certifies United Continental

The largest U.S. airline, United Continental Holdings Inc. (UAL - Analyst Report), created by the merger of United Airlines and Continental Airlines last year, received a single operating certificate from Federal Aviation Administration (FAA).

So far, United and Continental were operating as separate entities and their integration is progressing well. As of September, United and Continental’s check-in and ticket counter facilities have been relocated at 53 airports and more than half the fleet, including the first Boeing Co. (BA - Analyst Report) 747-400 has been repainted in the new United colors.

The combined company is yet to integrate the passenger services. This is the major milestone in the integration process. United Continental expects the implementation of a single loyalty program, Mileage Plus, in the first quarter of next year.

Going forward, United Continental will continue to benefit from merger synergies of $1 billion to $1.2 billion by 2013. Merger synergies would be in the form of $800 million to $900 million of additional revenue and $200 million to $300 million in cost savings. Approximately 25% of total synergies are expected to be realized this year.

With the sector’s best cash position, industry-leading revenues and a competitive cost structure, the merger provides improved access from Continental hubs to United’s strong Asia network and from United’s hubs to Continental’s international network in Latin America and Europe.

Post-merger, United Continental is making continued progress in expanding its on-board products and services in both domestic and international fleets. The company plans to invest more than $550 million to upgrade its aircraft interiors.

In this context, United Continental is adding flat-bed seats to all international premium cabinets and Economy Plus seats on the Continental fleet that will likely double the overhead storage space of the aircraft. Further, United Continental is improving its in-flight entertainment options by installing advanced broadband Wi-Fi services in its mainline fleet as well as introducing streaming wireless video in the Boeing 747-400 aircraft.

Although the merger benefits from Continental Airlines bode well for United Continental’s future growth, the successful integration, competitive threats from its peers Delta Air Lines Inc. (DAL - Analyst Report) and AMR Corporation and unionized workforce might limit the upside potential of the stock.

We are currently maintaining our long-term Neutral rating on United Continental. For the short term (1-3 months), the stock retains a Zacks #3 (Hold) Rank.

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CENTURY ALU… CENX 22.29 +3.39%
CITI TRENDS… CTRN 22.20 +3.11%
ERBA DIAGNO… ERB 2.87 +2.83%
ILLUMINA IN… ILMN 175.23 +2.78%
UNITED CONT… UAL 48.64 +2.01%