An update has been released on Corel Corporation (CREL), in which senior technology analyst Steve Biggs, CFA argues that the company should be rated a Hold.  We excerpted the following details:

'Following an approximately three-year stint as a privately held company, Corel Corporation has emerged as a much stronger and profitable entity. The company is pursuing an acquisition strategy that leverages new products across its strong sales and distribution network, which includes relationships with a number of OEMs, such as Dell (DELL).

'Although the stock is inexpensive, acquisitions add a degree of risk and delays in the adoption of HD video have caused the company to lower expectations. Corel is currently trading at a very reasonable 8.8x our fiscal 2008 EPS estimate of $1.40. Although a significant discount to the industry mean, we believe that CREL is a riskier stock than most of its comparables. This additional risk lies in its growth through acquisition strategy, meaning it needs to integrate disparate software platforms and continue to integrate operations.

'Future growth is likely to come through additional acquisitions, which are likely to be dilutive to earnings as the stock has a low valuation and additional debt is not an option given a high-debt balance. Although current market conditions have been challenging, we believe the stock should be fairly stable given its low valuation and modestly positive outlook. We, therefore, maintain a Hold rating on the shares and lower our six-month target price to $13.00 based on a P/E multiple of 9.3x 2008 earnings estimate of $1.40, a discount to the industry median and to the S&P 500.'