Zacks Analyst Blog Highlights: Avici Systems, Grupo Aeroportuario and Amylin Pharmaceuticals.

CHICAGO -- 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: Avici Systems (Nasdaq: AVCI), Grupo Aeroportuario

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

Here are highlights from Friday's Analyst Blog:

Slight Bump for Sell-Rated Avici

Although strong end-of-life router sales are driving better-than-expected revenue, our long-term outlook for Avici Systems (Nasdaq: AVCI) remains unchanged. We believe Soapstone offers a unique product and are encouraged by its compatibility with Nortel and Extreme, however we expect revenues to ramp slowly.

Six months from now, investors will likely be concerned about a lack of visibility into revenue growth from software. As such, we maintain a Sell rating on the shares with a slightly higher six-month price target of $7.50 to account for a higher cash balance.

Third quarter results were actually below our expectations, but the company expects to make this up in the fourth quarter. Our price target looks out six months, at which point product revenue for router sales in 2007 will be irrelevant to the company's valuation. Once router sales are complete, the stock should begin to trade on its current cash position, plus the value of a call option for the Soapstone business.

Grupo Aeroportuario Hits Oil Slick

We are changing our current recommendation on Grupo Aeroportuario del Sureste, S.A. de C.V. (NYSE: ASR) from Buy to Hold. Second quarter results were positive, with strong commercial revenues and positive passenger traffic. The outlook for the third quarter remains positive. The company has a long history of impressive results and strong cash flow.

However, the continued appreciation in the price of oil in the last few weeks coupled with a less benign economic environment in the U.S. is a huge short-term concern. In fact, since the U.S. Federal Reserve began to cut interest rates some weeks ago, oil has been appreciating almost on a daily basis, now getting to US$90 per barrel.

We believe the higher oil prices could undermine the end of the year tourist season in Cancun and Cozumel. Finally, the less positive economic environment in the U.S. as a result of the sub-prime mortgage system crisis, may affect the

Mexican economy in the following quarters since both economies have very strong ties.

Amylin Upgraded to a Hold

Amylin Pharmaceuticals, Inc. (Nasdaq: AMLN) is engaged in the discovery, development and commercialization of potential drug candidates for the treatment of diabetes, obesity and Cardiovascular diseases. The top-line is being driven by sales of two diabetes drugs, Byetta and Symlin. Sales of both drugs have disappointed over the past several quarters, but the Amylin story is tied to the success or failure of phase III potential blockbuster, exenatide LAR.

Data on LAR is expected in the next month or so. At this time we are optimistic that the data will be positive, but the valuation on Amylin is not attractive. The stock is trading at 18x our 2011 EPS estimate, well above the peer-group of 12x, and that estimate assumes LAR posts sales over $1 billion.

The odds favor that LAR will demonstrate superiority to Byetta in this non-inferiority 30-week trial. We believe that has the potential to give the shares a pop upward towards $50. However, Amylin is an extremely expensive stock at this level, and even if we assume the most bullish forecast for LAR sales in 2011 north of $1 billion, we still only get to just over $2.50 in EPS. That puts the shares trading at 18x 2011 EPS.

We would avoid the name. We are upgrading our rating on Amylin from Sell to Hold, and raising our price target to $50 per share. Despite our increase in rating, we still do not like the stock at this level for investors. The key reason for our upgrade is the impending data on exenatide LAR.

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

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