Zacks Analyst Blog Highlights: Marathon Oil Corp., Petroleo Brasileiro S.A., Varian Semiconductor Equipment Associates, Inc., Union Pacific Corp. and Comstock Resources, Inc.

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Here are highlights from Wednesday's Analyst Blog:

Marathon Going the Distance

Marathon Oil Corp.'s (NYSE: MRO | Quote | Chart | News | PowerRating) second-quarter results came in weaker-than-expected as lower downstream margins more than offset good results from the upstream and integrated gas segments. Income from the refining segment amounted to $158 million, down from $1.25 billion a year earlier.

However, the upstream segment's profit more than doubled to $828 million. We are maintaining our Buy rating as we continue to believe that the company's attractive inventory of development projects will produce high single-digit volume growth going forward. Additionally, downstream projects, particularly the Garyville expansion and the Detroit Project are expected to further strengthen its refining assets.

Petrobras Priced Attractively

We are keeping our Buy recommendation on Petroleo Brasileiro S.A. or Petrobras (NYSE: PBR | Quote | Chart | News | PowerRating) ADRs. We like Petrobras for its positive production-growth profile and the improving outlook for its downstream business. Moreover, the discovery of the giant Tupi field opens up a new range of possibilities for the company in the long run.

Recently, from the drilling of well known as lara in the northern part of Tupi field, PBR discovered light oil and natural gas, with estimated recoverable volume of 3 to 4 billion barrels of light oil and natural gas. The company's large inventories of development projects are also encouraging. Finally, second quarter 2008 results were better than expected, and the outlook for the following quarters remain quite encouraging, even though lower oil prices exist.

Varian Semi Still Best in Class

Varian Semiconductor Equipment Associates, Inc.'s (Nasdaq: VSEA | Quote | Chart | News | PowerRating) June top and bottom-line results met consensus estimates. VSEA has superior technology and remains several product generations ahead of competitors. As Nodes transition to 90 nanometers VSEA remains the strongest solution for ion implementation. Consequently we reiterate our Buy rating of the shares of VSEA and set a price target of $45.

On July 25, 2008 VSEA reported earnings for the third quarter of 2008 ended June 2008. Revenue for the quarter totaled $182.6 million, compared to revenue of $255.3 million last quarter and $288.7 million for the same period a year ago. The management delivered guidance for the second quarter of 2008. VSEA expects revenue to be between $130 and $140 million. Earnings per share are anticipated to be slightly above break even.

Union Pacific Chugging Along

We are retaining our Hold on Union Pacific Corp. (NYSE: UNP), as well as our $80 target price. UNP will report third quarter results on October 23. We are maintaining our 2008 diluted EPS estimate at $4.15, near the high end of management's increased $4.00-4.20 range (up from $3.88-4.13 before), and our 2009 EPS estimate at $5.

UNP should benefit from higher rates on contract renewal pricing and improved productivity, which should offset expected volume weakness and higher fuel costs. UNP posted second quarter EPS of $1.02, up 24% year-over-year, and better than consensus of $0.92 and our estimate of $0.91, largely due to higher-than-expected revenue growth.

Comstock Can Be Counted On

We are reiterating our Buy rating on Comstock Resources, Inc. (NYSE: CRK | Quote | Chart | News | PowerRating) shares following the Bois d'Arc divestiture. This transaction is expected to streamline Comstock's operations and position it as a pure-play onshore natural gas producer.

We continue to like the company for its growing volumes (first-half 2008 volumes were up 43%) and attractive valuation. The Haynesville Shale play offers significant long-term reserve-add potential, going forward. Comstock's drilling success in the Cotton Valley formation is another catalyst for future production growth.

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