Hitachi Cheap; Still a Hold

The following excerpts explain why Zacks senior technology analyst Steve Biggs, CFA remains neutral on Hitachi, Ltd. (HIT) one of the largest producer of electronic products in the world:

'Growing price competition in emerging technologies and increasing cost of raw materials has hurt Hitachi. Moreover, its net cash balance (cash less debt) has been continuously deteriorating, which has resulted in a cut to its annual dividend. However, the company continues to make progress in implementing its management plan for cutting operating costs and achieving profitability.

'Hitachi is trading towards the lower end of its 52-week range. On a price-to-sales basis, the stock is trading at a very reasonable 0.3x estimated fiscal year ending March 2008 estimates. We expect the stock to maintain a valuation in this range given the uncertain economic outlook.

'As such, our new six-month target price of $74.00 reflects a P/S multiple of 0.3x fiscal year ending March 2008 revenue per ADS estimate of $270.93. We maintain a Hold recommendation on the shares of Hitachi.'

GES Proves Itself Among Retailers

Though the general consensus is that the retail space will continue to trudge through a sluggish environment, Zacks senior retail industry analyst Rob Plaza, CFA contends that Guess? Inc.  (GES) remains one of the stand-outs in the space:

Guess' third quarter results easily beat its guidance and our estimates. The company also raised its fiscal 2008 guidance and issued fiscal 2009 guidance that was above market expectations. Management is typically cautious with its guidance, and we believe this is the case again. We expect Guess to easily beat its new earnings guidance.

'As such, we are increasing our fiscal 2008 EPS estimate from $1.96 to $1.99 and our fiscal 2009 EPS estimate from $2.29 to $2.42. Our view is that Guess will continue to be a winner in the retail space, and its stock should outperform the market. The company's fashionable merchandise continues to resonate with its customers, and its international expansion and product accessories are exceeding expectations.

'Guess continues to show that it is a top-notch retailer that can deliver impressive results quarter after quarters. We maintain our Buy rating and $60 target price.'

Sell-Rated Avici Target Lowered

Zacks senior telecom analyst Steve Biggs, CFA has recently lowered his target price on shares of Sell-rated telecommunication company Avici Systems (AVCI). Here are some of the reasons why:

'Although strong end-of-life router sales are driving better-than-expected revenue, our long-term outlook for Avici Systems remains unchanged. We believe Soapstone offers a unique product and are encouraged by its compatibility with Nortel (NT) and Extreme (EXTR), 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 and lower our six month price target to $6.50. Although recent results have been well ahead of expectations, this is a result of AT&T (T) buying additional routers before AVCI exits the business.

'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.

'With 2007 revenue tracking well over initial expectations, we expect AVCI's year-end per share cash balance to be approximately $4.67 with an additional $1.63 in long-term investments.