Marchex Fair at $11

An update has come out today on Marchex, Inc. (MCHX), in which senior information technology analyst Steve Biggs, CFA is restating his Hold rating on the company after lowering the price target slightly. We excerpted the following details:

'As a consolidator of local Internet advertising, Marchex, Inc. is executing on its strategy. The company continually improves its offering and has successfully attracted new customers. Although spending on Internet advertising is poised to accelerate, competition is also increasing. We, therefore, maintain a Hold rating on MCHX with a target price of $11.

'Marchex is poised to benefit from increased spending on paid search as the company differentiates itself from other search providers with focus on local advertisers. However, Marchex's business model is mostly untested given its short operating history with limited profitability on a GAAP basis. In addition, higher operating expenses and rising acquisition costs are eating up the income available to shareholders and its competitive environment is intensifying.

'MCHX is currently trading at 2.8x our 2008 revenue estimate of $3.76 per share, a discount to the industry mean. Our target price of $11 reflects a P/S multiple of 2.9x our 2008 revenue per share estimate of $3.76, which we believe the stock can reach given the valuation range of its peer group.'

For Now, XNPT a Hold

A Hold recommendation has recently been issued to biopharmaceutical company XenoPort, Inc. (XNPT) by Zacks senior life sciences analyst Jason Napodano, CFA. Here's what his latest update had to say about it:

'XenoPort is a biopharmaceutical company focused on developing a portfolio of internally discovered product candidates for the potential treatment of central nervous system (CNS) disorders and gastro-esophageal reflux disease (GERD). The lead candidate is XP-13512, a Transported Prodrug of gabapentin.

'The company partnered with GlaxoSmithKline (GSK) for development and commercialization in the U.S. and select countries outside the U.S. The drug is in late-stage trials for the treatment of Restless Leg Syndrome (RLS). So far the data have been highly encouraging. XP-13512 could launch in 2009.

'The shares have performed extremely well over the past several months, up five-fold since the summer of 2005. We think the market is coming to grips with the power XenoPort's Transported Prodrug technology. We believe there are potentially hundreds of currently approved molecules that have failed to achieve peak penetration because of deficiencies in the oral absorption or metabolism.