Zacks Analyst Blog Highlights: McGraw-Hill Companies, Inc., Tractor Supply Co., Regis Corp., Baxter International, Inc. and Magellan Midstream Partners, L.P.

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Here are highlights from Tuesday's Analyst Blog:

McGraw-Hill Downgraded to Hold

The outlook for McGraw-Hill Companies, Inc.'s (NYSE: MHP) Financial Services segment is murky as the mortgage-backed securities and collateralized debt obligation markets have dried up. This segment contributes 45 percent of total company revenue.

Financial Services operating income is shrinking at mid-20's rate and we don't think it will trough until at least the fourth quarter, and then it may likely remain weak through 2009. This weakness should be partially offset by mid-to-high single-digit growth in both the Education segment and Information & Media segment.

Pick Up Tractor Supply Shares

We are upgrading Tractor Supply (Nasdaq: TSCO | Quote | Chart | News | PowerRating) shares to Buy from Hold. TSCO shares are down over 45 percent in the last twelve months and over 22 percent year-to-date. This sell-off was due to difficult macro conditions including higher food and energy prices, weak consumer confidence, and declining home prices. Put simply, consumers have fewer dollars to spend in retail stores.

We believe that Tractor Supply's unique retail concept, store locations, and target customer will help the company through this difficult period for retailers. Our bullish view also comes from the company's aggressive store expansion, expanded merchandise mix, and operating improvements that continue to produce solid sales and earnings growth.

How Attractive is Regis Corp.?

We continue to rate shares of Regis Corp. (NYSE: RGS | Quote | Chart | News | PowerRating) a Hold. Given the current challenging operating environment and the recent weakness in same-store sales, we believe that a multiple nearer the lower end of the company's average historic range is warranted at this time. The positive comps in the third and fourth quarters are an encouraging sign; however, we believe the outlook remains challenging.

Regis is by far the largest company in the hair care industry, a market that generates annual revenues of $53 billion in the United States and $150 billion worldwide. While the hair salon business will remain the dominant operating segment for Regis, generating at least 90 percent of annual sales, the company's other segments have strong growth outlooks. The demographic trends indicate growing demand for the company's hair restoration services.

Heparin Taints Baxter Outlook

We maintain our earnings estimate on Baxter International, Inc. (NYSE: BAX | Quote | Chart | News | PowerRating) ahead of the quarter, believing the company will easily meet our conservative top-line estimate. A continued low effective tax rate and positive operating margin gains should yield EPS ahead of our estimate.

We maintain estimates below guidance due to potential execution risks related to the U.S. re-entry of Colleague Infusion pumps and the recent Heparin fall-out with China. Our 2008 EPS estimate is now in line with the management's $3.18-$3.24 guided range. We believe BAX is fairly valued at $64.50.

Ahead of Results, Hold Magellan

We are reiterating our Hold recommendation for Magellan Midstream Partners, L.P. (NYSE: MMP | Quote | Chart | News | PowerRating) units ahead of the partnership's second-quarter results, primarily reflecting the partnership's premium valuation relative to the peer pipeline MLP group.

However, we are raising our earnings estimates to reflect contribution from increased transportation tariffs. Our new 2008 and 2009 earnings estimates are $3.02 and $3.18 per unit, increased from $2.82 and $2.90 per unit, respectively.

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