Omnicom Fighting Ad Competition

Omnicom Group (OMC) continues to generate solid organic revenue growth and new business wins. In addition, management continues to acquire complementary companies that either serve or have the ability to serve the existing client base through the extension of the company's platform of services.

However, an intensely competitive advertising environment and worries about the economy affecting the level of advertising spending are headwinds that can restrain earnings growth. In addition, the company's significant international operations add volatility to top-line growth.

Omnicom's strong cash flow allows management to enhance shareholders value by share repurchases and dividends increases. In May 2007, the board of directors increased the quarterly dividend by 20 per cent to $0.15 per share from the previous split-adjusted quarterly cash dividend of $0.125 per share

Shares of Omnicom Group are currently trading at a price-to-cash flow multiple of 14.2 times trailing 12-month (TTM) cash flow. Over the last few years, the stock has traded in a wide Price-to-Cash Flow range of 22 to 7, with the most of the price action within the 20 to 12 range. The target price is $49.50, which is a 15 price-to-cash flow multiple on trailing 12-month cash flow. The Hold rating is maintained for the shares of Omnicom Group.

Allied Irish Banks a Good Buy

We are maintaining our Buy on Allied Irish Banks, plc (AIB), as well as our $60 price target as we consider the stock attractive at its current price. In its 2007 full-year report, AIB posted net income of 1.8 billion euro, up 14% from 2006's 1.6 billion euro, but modestly below our estimate due to a higher-than-expected tax rate.

We are reducing our 2008 diluted EPADS estimates to $6.20 from $6.23, partly due to US$ depreciation against the euro. This is in-line with AIB management guidance calling for low single-digit growth in earnings per share.

AIB's results should benefit from solid loan growth offset, in part, by increasing loan impairment provisions from a very low level in 2007 and declining net interest margins due to slow deposit growth and increased competition. AIB just increased its annual dividend to 0.79, or $2.33 per ADS.

At its current price, AIB is trading at 7.2X the 2008 estimate and 6.7X the 2009 estimate, based upon consensus estimates for 2007 and 2008, respectively. These are well below the median P/E ratios for the industry, also based on consensus estimates.

AIB's growth prospects, estimated at 12% over the next few years, match the industry's and its dividend yield exceed the industry median by a wide margin. We are maintaining our Buy recommendation on Allied Irish Banks, plc, as well as our target price of $60, which represents about a 9¾X P/E based on our 2008 estimate of $6.20 per share.

Near-Term, a Hold on Goldcorp

Goldcorp, Inc. (GG) is a Canada-based gold producer. The acquisition of Glamis Gold Limited is a major milestone for the company. Further, upon the acquisition of the Placer Dome Canadian assets from Barrick Gold Corporation (ABX), the company is expected to produce gold at a cash cost of about $100/oz. Expansions at the Penasquito mine is also expected to drive production.

However, the company is exposed to various levels of political and economic risks, and uncertainties. Currently, shares of Goldcorp Inc. are trading at 32.5x our 2008 EPS estimate of $1.30.

On February 21, 2008, Goldcorp reported fourth quarter and full year 2007 results. Gold sales for the quarter increased to 638,500 ounces at a total cash cost of $195 per ounce, compared with 599,500 ounces at a total cash cost of $160 per ounce in 2006. The company attributed the increase in total cash costs to the strengthening Canadian dollar, additional net proceeds payments from YMAD and an increase in the cost of consumables in the industry.

However, the risk associated with the acquisition strategy and production risk at some mines lead us to rate the stock a Hold with a six-month target price of $44. This is 33.8x our 2008 EPS estimate.

TriQuint Semi with Muted Guidance

TriQuint Semiconductor, Inc. (TQNT) reported revenues of $128 million in Q4:FY2007, in line with our estimate. The margins improved both on a GAAP and proforma basis. GAAP EPS came in at $0.10. Proforma EPS came in at $0.11, beating our estimate of $0.09, primarily driven by better than expected gross margins.

The increase in revenues was primarily due to an expanding portfolio of transmit modules and increasing RF content in multi-mode cell phones. The company saw growth in nearly all markets including handsets, networks and military. Handset revenues, accounting for 54% of revenues, grew 13% year-over-year, driven by growth in GSM and CDMA.

Going forward, Q1:FY08 is a seasonally low quarter for the company. Revenues are expected between $110 million and $115 million.