The management expects to post EPS of $0.79-$0.83 on revenues of $4.55-$4.75 billion in the fourth quarter of fiscal 2008. The company recently announced an acquisition in India. Given acquisition-related integration risks and concerns related to its high level of debt, we are maintaining our Sell rating and have set our target price at $28.

The company is also being adversely affected by the price war between Intel Corp. (INTC) and AMD (AMD); it is expanding its relationship with AMD even as its Intel business shrinks. The outlook for the Electronics Industry, too, is about average relative to the S&P 500.

Avnet shares are currently trading at 9.6x multiple to our fiscal 2008 (June, 08) earnings estimate and 9.2x our FY2009 EPS estimate. Our current target price is $28 (9.0x FY2008 earnings estimate), to reflect the margin issues and sluggish demand across the company's computing business. The time-to-market (TTM) return-on-equity (ROE) was 13.3%. TTM revenue had grown steadily up until Q1:FY08 and has bounced back in Q3:FY08.

However, Avnet has over $1 billion in long-term debt. The equity multiplier has been bumpy over the last 11 quarters, as equity had been increasing faster than the increase in total assets. This is a metric to watch, given the company s already large total debt position.

Diversity Needed at Genomic Health

Genomic Health, Inc.'s (GHDX) lead product is Oncotype DX, which is used for early-stage breast cancer patients to predict the likelihood of cancer recurrence. The company is also conducting studies to expand the product offering of Oncotype DX for colorectal cancer and for those on taxane therapy. Sales of Oncotype remain robust and we expect the company to deliver 40 percent more test results in 2008 compared to 2007. We maintain our Hold rating on the stock.

The company relies heavily on Oncotype DX for both short-term and long-term growth. Sales of the test continue to rise sharply and the company expects to cross the $100 million mark in sales in 2008, a year ahead of our expectations. The recent positive developments validate the clinical utility of the assay and coupled with the company's continuing marketing efforts, will help increase the awareness of Oncotype among patients, physicians and payers.

We believe the company's shares are fairly valued at the current level. We are optimistic about the growth of Oncotype. However, we would like to gain more visibility on how Genomic Health diversifies its product offerings and expands internationally before we become bullish on the shares.

We arrive at our target price $22 per share by using a P/S multiple of 7.5x our 2011 sales figure of $247 million, discounted back at 25 percent for three years.

No Magic for MGIC Investment

MGIC Investment Corporation's (MTG) core first-quarter results were better than our expectations. However, the results continued to be impacted by increases in both the number of delinquent loans and foreclosures due to a further decline of home prices and slowing of economy. In addition, higher loss severities also negatively impacted the results. Thus, we maintain our Sell recommendation on the shares.