2008-09-05 12:09:05 -

- 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: SAP AG (NYSE: SAP), H.J. Heinz Co (NYSE: HNZ), NewAlliance Bancshares, Inc. (NYSE: NAL), Norfolk Southern Corp. (NYSE: NSC) and Home Diagnostics,

Inc. (Nasdaq: HDIX).

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Here are highlights from Thursday's Analyst Blog:

SAP Growth Getting Challenged

SAP AG (NYSE: SAP) reported slightly higher revenues and weaker-than-expected earnings in second quarter of 2008 due to the costs of BOBJ acquisition. The company continued its growth in Asia, Americas and Europe.

Additionally, the company proved it is still competitive with the larger deals, winning Heinz Company (NYSE: HNZ) and Hallmark during the second quarter. Despite this, the uncertainty regarding its willingness to look for larger acquisitions to help fuel its growth, compared to its previous organic growth strategy is likely to hinder the company's stock performance in the near term.

NewAlliance Difficulties Priced In

NewAlliance Bancshares, Inc.'s (NYSE: NAL) 2Q08 diluted earnings of $0.12 per share were one penny short of our estimate as well consensus. The miss was primarily due to higher-than-expected provision expense.

Credit quality though still quite solid, weakened slightly during the quarter, with non-performing loans up 13 bps sequentially to 0.53% of total loans. Net interest margin increased 11 basis points to 2.67%, mainly due to lower cost of funds. While the company is expected to continue to benefit from its strong capital position and credit quality, relative to its peers; increasing credit costs will keep the earnings under pressure.

Norfolk Southern Target Higher

We are maintaining our Hold rating on Norfolk Southern Corp. (NYSE: NSC), but raising our target price to $70. In its second quarter report, NSC posted EPS of $1.18, well above the consensus and Zacks estimate of $1.05, largely due to better-than-expected revenue growth.

Revenues rose 16% due to a 14% gain in revenue yield, partly offset by a 2% volume decline. We are increasing our diluted EPS estimates to $4.30 from $4.05 for 2008 and to $4.90 from $4.60 for 2009. We expect results to benefit from continued strong pricing, though volumes should decrease due to economic weakness. Fuel costs will likely prove a significant headwind. NSC recently increased the dividend 10% to a $1.28 annual rate and has increased the dividend 23% over the last twelve months.

Home Diagnostics Getting Bigger

Home Diagnostics, Inc. (Nasdaq: HDIX) is small but growing player in the $7 billion worldwide blood glucose monitoring market, estimated to be growing 8% per annum in North America and 17% per annum outside of North America. The company markets its products through 40,000 retail chains and wholesalers, capturing 3.6% of the market.

The company reported second quarter revenue growth of 18.9% year-over-year, slightly higher than our estimates. Barring retail, growth was seen across all the revenue channels. Home Diagnostics' integrated sales approach and co-branding initiatives with retails are paying off, enabling them to capture incremental market share. We expect this trend to continue. The company expects to launch two new products, TRUEresult and TRUEto go, in the second half of 2008.

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