Zacks Analyst Blog Highlights: Fannie Mae, Freddie Mac, Transocean, Inc., Avon Products and MannKind Corporation.

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: Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), Transocean, Inc. (NYSE: RIG), Avon Products (NYSE: AVP) and MannKind Corporation (NASDAQ: MNKD).

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Here are highlights from Friday’s Analyst Blog:

Larger Role for Fannie & Freddie

Within the "Homeowner Affordability and Stability Plan" announced yesterday, the Government laid out expanded role for the two mortgage finance giants, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), in the housing markets. The Treasury doubled the preferred stock back-stop funding for these two Government Sponsored Enterprises (GSEs) to $200 billion each, with the hope that this should enable them to maintain a positive net worth, as the losses will continue to rise in the coming months.

The Treasury will continue the purchase of mortgage-backed securities issued by them. At the same time, they were also allowed to increase the size of their retained mortgage portfolios by $50 billion to $900 billion along with corresponding increases in the outstanding debt.

Transocean Remains Flush

Transocean, Inc.'s (NYSE: RIG) 4th-quarter 2008 results came in modestly below our expectations, though they were significantly above the year-earlier level. Transocean continues to generate significant cash flows supported by a $38.7 billion backlog, which is of very high credit quality.

The company is deploying its ample cash flows to strengthen its balance sheet, invest in its new-build program, and return cash to shareholders through buybacks. The company is currently seeking shareholder approval for a $3.02 billion share buyback program.

Avon Announces Changes at CAGNY

Avon Products (NYSE: AVP) presented at the CAGNY (Consumer Analysts Group of New York) today in Boca Raton. The company continues to execute its 4-Point Turnaround Plan first announced in November 2005. Under the pillars of 1) Commitment to Brand Competitiveness, 2) Win with Commercial Edge, 3) Elevate Organizational Effectiveness, and 4) Radically Transform the Cost Structure, the company had sparked growth in the Beauty and Fragrance categories, along with capturing $270 in annualized cost savings. Also, PLS (Product Line Simplification initiative) and SSI (Strategic Sourcing Initiative) have garnered cost savings of $40 million and $135 million, respectively.

The Color category appears to be turning around, aided by the Mistake-Proof Mascara, Pro-To-Go, and Plumping Lipstick campaigns featuring Reese Witherspoon. Look for the new Fragrance Spotlight introduction in April featuring newly signed Courtney Cox.

MannKind Remains in Peril

Afresa (inhaled insulin) is MannKind Corporation's (NASDAQ: MNKD) only late-stage drug candidate, and the company is wrapping up all phase III trials. The NDA [new drug application] filing with the FDA is expected late this month.

Besides Afresa, there are no other visible candidates in the pipeline. The thin pipeline puts MannKind in a higher risk category than most of its peers. MannKind has currently kept all partnership talks on hold. At current market conditions and with the bleak outlook for the inhaled insulin drugs, it should prove to be extremely difficult to find a partner for Afresa. With no commercialization experience at all and limited infrastructure in place, we doubt if Afresa can provide that kind of growth MannKind needs to keep the company afloat.

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