Zacks Analyst Blog Highlights: Transocean, Global Santa Fe, ExpressJet and Continental Airlines 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: Transocean (NYSE: RIG), Global Santa Fe (NYSE: GSF), ExpressJet Holdings, Inc. (NYSE: XJT) and Continental Airlines (NYSE: CAL).

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Here are highlights from Mondays Analyst Blog:

Transocean Unearths New Profits

We are maintaining our Buy recommendation on Transocean (NYSE: RIG) shares following the company's quarterly results and, more importantly, the shareholder approval of its tie-up with Global Santa Fe (NYSE: GSF). We continue to believe that this merger transforms the company into an offshore drilling powerhouse.

We are maintaining our fourth-quarter 2007 EPS estimate and raising our full-year 2008 estimate ($13.28 vs. $11.85) to reflect the GSF-related accretion and the continued strength in the offshore drilling markets. We continue to like Transocean shares for its strong leverage to the continued positive outlook for the deepwater drilling markets, which has received a significant boost from its GlobalSantaFe tie up.

With a combined backlog of over $30 billion, Transocean offers an unmatched level of earnings and cash flow visibility. Our new price target of $135, up from $120 earlier, reflects 2008 PE and EV/EBITDA multiples of 10.2x and 8.0, respectively. The premium to the peer group is inline with the way the stock has historically traded, given its leadership position in the offshore market.

Cutting Estimates on Hold-Rated XJT

We are maintaining our Hold on ExpressJet Holdings, Inc. (NYSE: XJT) reported a third quarter loss per share of $0.40, below our estimate of a $0.14 loss per share. Higher fuel and marketing costs combined with lower revenues from the branded fleet were the reasons for the shortfall. We are cutting our 2007 EPS estimate again this time to a $1.10 loss per share from a $0.56 loss per share, as well as slashing our 2008 estimate to a loss of $1.20 per share from EPS of $0.80.

We note that any estimate could prove wide of the mark given the uncertainties about XJT's new business plan. However, until branded sales increase and the branded fleet is more productive (it had a load factor of 60.5% versus 79.4% for the contract business in the third quarter), XJT will continue to post operating losses. Higher fuel costs pose an additional challenge. At its current price, the stock trades well below the regional and industry medians for price/sales and price/book.

While plans have been finalized for the 69 jets released by Continental Airlines (NYSE: CAL), it remains to be seen whether XJT can operate these profitably under its new business model. Until there is better visibility regarding XJT's situation, we think a Hold recommendation is appropriate. Our six-month target price of $3 reflects a 0.7X price/book value.

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