Hold-Rated POWI Target $30

Zacks senior semiconductor analyst Ken Nagy, CFA has maintained his Hold recommendation to original equipment manufacturer (OEM) of semiconductor power conversion ICs Power Integrations, Inc. (POWI). Here's what his latest report said:

'Power Integrations is an OEM of semiconductor power conversion ICs. The California Energy Commission recently pushed out an industry mandate that should create an earnings catalyst in 2008. A solid product portfolio, new patents and product launches, along with the recently adopted worldwide energy standards, should drive growth. The timing and magnitude of the revenue growth, along with ongoing legal expenses are over-hangs on the stock.

'POWI shares are trading at a 20.2x multiple of our 2008 EPS estimate (P/E). The company has a solid IP portfolio and continues to launch new products, which should drive revenue in 2008. The company had very strong design win activity in the last few quarters, although revenue on these design wins may not be recognized in the near term. While the new energy standards should boost sales in the first half of 2008, increased litigation expenses will continue to pressure the bottom-line.

'The decision to push up the date of the CEC mandate by six months is a moderate negative but it will just delay revenue, it will not be lost. The Option inquiry brings up a question of management integrity, which is almost always a negative. As a result, we believe the shares will trade around the current valuation metrics. We continue to remain cautious and rate shares of POWI a Hold. We are setting a target price of $30, which corresponds to a P/E multiple of 23.1x.'

Update. The company has restated years 1998 to 2004 as a result of an options investigation and has been re-listed on the exchange.

Staying Cautious with AAPL

New product introductions in 2008 are not quite enough for Zacks senior technology analyst Steve Biggs, CFA to upgrade his recommendation on Apple, Inc. (AAPL) shares from its current Hold rating at the present time.  His latest report on the company explains:

'The strength of Apple's iPod business is driving growth in the rest of its business. We expect Macintosh to continue taking share from traditional PCs as consumers become more familiar with Apple products and enjoy the enhanced media capabilities, and we expect the iPhone to continue its strong ramp as well.

'However, we are cautious on consumer spending going into 2008, which was reflected in Apple's guidance for the March quarter. We therefore maintain our Hold rating on AAPL shares and lower our price target to $145.00.

'With a strong new product pipeline for 2008, including MacBook Air, Mac Pro, and iTunes Movie Rentals, we believe the stock deserves a premium valuation to its peer group. However, given the continued investment in its phone business and an increasingly saturated market for digital audio players, we believe upside may be more limited over the next twelve months.

'Moreover, we are cautious on consumer spending during 2008, which was reflected in Apple's guidance for the March quarter. We therefore continue to rate AAPL shares a Hold and lower our six month price target to $145.00, representing a P/E multiple of 28.8x our fiscal 2008 estimate.'

Target $45 on DuPont

Zacks senior chemicals industry analyst Paul Raman, CFA had this to say in his recently updated Hold report on DuPont Chemical (DD):

'DuPont is the world's second leading chemical company. Growth will be driven by non-G7 markets, agricultural chemicals and a focus on key customers and new products. Higher prices and lower costs will struggle to offset higher raw material costs.

'Additionally, the risk of an economic slowdown and a major patent expiration force us to rate the stock a Hold with a target of $45.00.  This is 13.3x our 2008 estimate. Du Pont is currently valued at 12.5x our 2008 estimate of $3.39.

'DuPont is the maker of familiar brand names such as Corian, Kevlar, Pioneer, Tyvek and Teflon. With over 21,000 worldwide patents and 15,000 worldwide patent applications, DuPont is a global chemicals and life science company, and sells its products to diverse markets including transportation, construction, apparel, agricultural, nutrition and health, packaging and electronics markets.'

Upside for VLO Remains

Senior analyst Sheraz Mian, who covers the oil & gas industry for Zacks Equity Research, continues to make the case for oil refiner Valero (VLO) to remain a core  holding:

'We are maintaining our Buy recommendation on Valero shares, but lowering our earnings estimates ahead of its quarterly results. Our new fourth-quarter 2007 and full-year 2008 EPS estimates are $0.68 and $8.10, down from $1.48 and $8.85 before, respectively.

'Starting from the third quarter of 2007, the refining group has been operating in a challenging environment, characterized by depressed margins due to high feedstock costs and weak product demand. Despite these headwinds, we believe that the underlying fundamentals of the U.S. refining industry remain intact and attractive.

'We consider Valero as our core refining play given the size, geographical diversity, and complexity of its operations.