Our new target price of $69.00 represents a P/E multiple of 27.7x our 2008 EPS estimate, a premium to the industry mean.

Benchmark Sets an Even Bar

Benchmark Electronics, Inc. (BHE) should make progress with new programs in 2008 despite pressure in the high-end Computing segment, regulatory headwinds in the Medical segment, and some softness in the Test & Instrumentation segment. Most notably, the Medical segment has been positive in an otherwise lackluster environment. We therefore maintain a Hold rating on the shares.

However, BHE does appear to have more short-term challenges than its peer group and we remain concerned about the economy in 2008. Benchmark operates in an intensely competitive environment and faces competition from Celestica (CLS), Jabil Circuit (JBL), and Sanmina SCI Corporation (SANM). In addition, Benchmark is exposed to significant customer and sector (Computing) concentration risks.

Weak demand and slower product and program transitions has hurt Benchmark's revenue base. Shares of Benchmark are currently trading at 11.3x our 2008 EPS estimate of $1.56, a discount to the industry, but very close to its closest comparables. We believe the current price leaves room for some upside, and set a six-month target price of $19.00, representing a P/E multiple of 12.2x estimated 2008 EPS.

Where Will Pfizer Spend Cash?

We believe Pfizer, Inc. (PFE) continues to face an uphill battle in growing its top-line given the company's sheer size and lack of a significant pipeline. While near-term earnings growth will come in the form of cost-cutting and share repurchases, the company lacks a catalyst to increase revenues once cholesterol drug Lipitor loses patent exclusivity.

At the current level, Pfizer is trading at only 7.5x our 2008 EPS estimate of $2.37. This is significantly below the peer-group currently trading at around 13.6x 2008 EPS. The wildcard with Pfizer and part of the reason for its cheap valuation, however, is the question of what they will do with their mountain of cash.

We believe that growth investors seeking to play large-cap pharma or biotech can probably find better alternatives to Pfizer. That being said, Pfizer is a pharmaceutical behemoth with hordes of cash looking to find acquisitions that will jumpstart its revenue.

Although we have been disappointed by management's inability to find a significant transaction, we are hanging on to the hope that it is going to happen before Lipitor loses patent exclusivity. As a result and given the stock's cheap price tag and juicy dividend, we believe the shares are worth holding onto.