Zacks Analyst Blog Highlights: Brightpoint, KMG America and The Hershey Company

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: Brightpoint (Nasdaq: CELL), KMG America (NYSE: KMA) and The Hershey Company (NYSE: HSY).

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Friday’s Analyst Blog:

Brightpoint Reinitiated Lower

We reinitiate Brightpoint (Nasdaq: CELL), a leading distributor of wireless devices and logistic services to the wireless industry, with a Hold rating as we assess the company's global expansion activities. In a general sense, we believe the handset distribution opportunities for the company remain strong, although margin obtained from this form of business is tight, with gross margins typically in the 5-6% range.

In lieu of the low margin operation, Brightpoint is still able to harness earnings to its shareholders, although cash flow continues to be exhausted on a sequential basis. The company plans to bolster higher margin logistic services to manufacturers and wireless carriers.

KMG America a Takeover Target?

For KMG America (NYSE: KMA), A.M. Best's lowered its outlook on the operating subsidiary, which help to significantly reduce its share price. However, the company responded by hiring an investment bank to explore a variety of strategic alternatives, including the possible sale or merger of the company with a more highly rated firm.

We must point out that it was only the outlook that was lowered and not the subsidiary's financially strong A- rating. While there are now overhangs, we continue to see upside potential (including a takeover scenario) from the current levels. Thus, we have adjusted our FY07 estimate and FY08 estimate EPS [earnings per share] to reflect 1Q07 results, and have lowered our previous price target. However, we are maintaining our Buy recommendation.

Sweet Valuation on Hershey's

Management at The Hershey Company (NYSE: HSY) recently announced a three-year Global Supply Chain transformation plan that should reduce costs and stimulate sales growth. In addition, the share repurchase plan continues with an incremental $250 million authorization in December 2006. Although the company posted mediocre results in the first quarter of 2007, management's initiatives should restore the company's EPS [earnings per share] growth once the headwind of rising dairy costs abates.

Since the stock is at the low end of its five year P/E [price-to-earnings] range at 21.3, Hershey's is attractive and remains rated a Buy. Hershey's EPS growth should begin re-accelerating in late 2007 by focusing on core products, introducing new products, reducing costs and expanding operations overseas.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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