Hartford Financial Range-Bound

Hartford Financial Services' (HIG) 2Q08 core earnings of $2.22 per share were $0.13 per share ahead of consensus. However, net income for the quarter was down 13.4% year-over-year due to realized capital losses. Assets under management grew 2.6% year-over-year.

Though HIG is expected to benefit from its leading position in several of its markets and its plans to expand the retirement income products range to take advantage of growing needs in the U.S. as well as in Japan, higher losses in the investment portfolio and increased competition should limit the upside potential. We are maintaining our Hold recommendation on the shares.

After reviewing 2Q08 results and the guidance by management, we are lowering our FY08 and FY09 core earnings estimates to $9.20 per share and $10.10 per share, respectively. At the current price level, shares of HIG trade at 1.22x its June 30, 2008 reported book value of $55.51 per share and 1.05x its adjusted book value (excluding AOCI) of $64.68 per share.

In recent past, the shares of HIG had traded in the 1.3-1.7x book value multiple ranges, supported in part by the share repurchase program. It is difficult to anticipate significant price-to-book value multiple expansion at this point in time due to the challenging environment, as we expect the company to face increased competition and higher losses in the investment portfolio in the coming quarters.

However, given that the shares are trading at an 11% discount to the peer group median price-to-book ratio in spite of ROE [return on equity] being 22% above median, we expect some upward movement from the current valuation. As such, our six-month price target of $72.00 per share incorporates values for both the P&C and Life segments at 1.08x to our estimated book value of $66.50 per share (excluding AOCI) as of December 31, 2008. This price target also equates to 7.8x our estimated earnings for the year 2008.

Anadigics Beats Estimates

Anadigics, Inc. (ANAD) reported Q2:FY08 results, which topped our estimates, driven by stronger than anticipated growth in broadband. Revenues of $80.5 million, up 8% q/q and 49% y/y, exceeded our estimate of $78 million.

The management issued guidance for the September quarter of $0.10-0.14 on revenues of $75.0-81.0 million, which compares to street expectations of $0.18 on revenues of $83.1 million and our estimate of $0.17 on revenues of $82.2 million. The company indicated that the guidance shortfall was a result of overall weak wireless demand and an inventory re-balancing at some of its customers.

Operating expenses are expected to increase by $1 million sequentially in the September quarter, which includes an additional $500k of depreciation related to the new China facility.