Zacks Bull and Bear of the Day Highlights: Scientific Games, Highwoods Properties, Infosys, Linear Technology and Resource Capital.

CHICAGO -- Zacks Equity Research highlights Scientific Games (Nasdaq: SGMS) as the Bull of the Day and Highwoods Properties (NYSE: HIW) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Infosys Technologies Ltd. (Nasdaq: INFY), Linear Technology Corp. (Nasdaq: LLTC) and Resource Capital (NYSE: RSO). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: Scientific Games (Nasdaq: SGMS)

Scientific Games has a leading position in several markets, including the instant ticket and online lottery markets. In addition, Scientific Games continues to win significant contracts in both the instant ticket and online lottery markets from both domestic and international lottery authorities. Also, the company has made several acquisitions that have accelerated top line growth. Ron Perelman, a world renowned private investor, owns 28.1% of the company's stock. The recent pressure on the stock is a result of the loss of three online lottery contracts (PA, SC, WV) and the resulting exit of earnings momentum investors.

Bear of the Day: Highwoods Properties (NYSE: HIW)

We continue our sell rating based on macro economic factors. The U.S. economy is rapidly declining and job losses are accelerating across the county. We think operations will get worse in 2008 and suburban office owners will have difficulties maintaining occupancy and increasing rents when corporate layoffs continue. We would stick to more defensive sectors over the next six months, i.e. apartments and health care focused REITs.

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Infosys Technologies Ltd. (Nasdaq: INFY)

Infosys Technologies is expected to report in-line results for the fourth quarter on April 15th. The company continues to strengthen strategic alliances and reorganize businesses in order to counter the effects of a strong rupee.

The company was able to improve operating margins in the third quarter despite a higher attrition rate, higher wages and appreciation of the rupee, which were likely to pressure margins in the quarter. These effects were offset by SG&A cost savings and a slew of tax and provision reversals.

We maintain our 2008 revenue estimates at the higher end of the guidance range, although wages, currency and attrition remain our major concerns. The company's shares are presently trading at roughly 18.2x our fiscal year 2008 EPADS estimate of $2.02 and at 15.8x our FY09 EPADS estimate of $2.33. While our FY2008 estimates call for year-over-year revenue and earnings growth of 35.1% and 34.5%, respectively, we believe the company is on target with large-scale and longer-duration BPO deals even as competition intensifies for larger deals and growth on a larger scale becomes more difficult.

Linear Technology Corp. (Nasdaq: LLTC)

Linear Technology is a leading OEM of analog and mixed signal semiconductors. December quarter revenue was in-line with consensus expectations, although the EPS exceeded. Forward guidance is for a 1%-5% revenue growth in the next quarter. We believe that the company has strong fundamentals. Linear generates strong cash flow, which enables management to expand its R&D capabilities and return cash to shareholders in the form of share repurchases and dividends.

Management recently leveraged the balance sheet, which had a positive impact on the EPS. The shares are currently trading at a 17.3x multiple of our 2008 earnings estimate (P/E). Linear Technology has an attractive business model that features some of the most favorable margins within the technology sector. The company grew sales by 30 per cent during a semiconductor down-cycle in 2005, and 4 per cent in fiscal year 2006. Growth tapered off in fiscal 2007, as management continued to pursue only those business lines that afforded gross margins at the level historically enjoyed by the company.

Resource Capital (NYSE: RSO)

Resource Capital continues to pay a $0.41 per share dividend, putting the current yield over 20%. Fourth quarter adjusted net income, excluding non-cash charges, was $0.43 per share in the fourth quarter, ahead of our estimates. Operationally, the company continues to perform well and almost all of their commercial loans are performing.

We rate the shares a Hold due to the uncertainty in commercial real estate debt markets. We think more of the company's commercial loans will have problems in the coming year as commercial fundamentals are eroding. In addition, many of the company's former financing sources are no longer available. We expect some type of dividend cut in financial year 2008.

On a price/earnings basis, the company is trading at 4.9x our 2008 estimates of $1.60 per share (excluding impairments), a 14% premium to sector averages. In addition, RSO is valued at .73x GAAP and 0.65x economic book value, in line with its peer group. We expect commercial real estate loan volumes to decrease over the coming year as residential housing problems will begin to spill over into the commercial sector. The credit squeeze should continue at least through the end of the year, and spreads could decrease as investors' appetite for mortgage bonds will continue to wane in the coming months.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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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.

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