Ests Lowered on Buy-Rated DOX

We maintain our Buy recommendation with a reduced valuation target for Amdocs, Ltd. (DOX), a leading provider of CRM [Customer Relationship Management] and billing software to telecom carriers, as the company will shortly announce second quarter (ended March 30) fiscal 2008 earnings results. We believe long-run fundamentals for the company remain strong as Amdocs continues to benefit from large transformation projects at many telephone carriers requiring converged & consolidated network solutions.

However, we lowered our six-month valuation target based on possible near-term business fluctuations and the announced reduction of subscribers at one of its major customers, Sprint-Nextel (S), which may offset Amdocs revenue as it depends on the number of subscribers served. Recent recessionary expectations in the U.S. economy may also generate some sales downturn.

Nevertheless, taking a longer term perspective, Amdocs maintains a healthy financial position and strong order backlog. The current valuation of the stock near its 52-week low is also considered to be more favorable.

Harris Interactive Tests Average

Harris Interactive Inc. (HPOL) is the 13th largest market research firm in the world. The company conducts proprietary and public research to help its clients achieve clear, material, and enduring results. Harris Interactive competes in the custom research market, which makes up about 1/3 of the overall research market. It is famous for its innovative use of Internet methodology for conducting systematic and accurate market research, as well as the Harris Poll, one of the most respected proprietary surveys in the world.

The company's leading position in online research and its pioneering methodologies should allow it to capture a significant share of the business for online rather than traditional research methods. While the company currently appears well positioned, the market research industry has low barriers to entry. Harris faces stiff competition from marketing research data collection firms that have developed Internet-based products and services.

Currently, Harris Interactive is trading at 22.5 times our FY2008 EPS estimate of $0.11. However, FY2008 guidance is apparently under review and expectations will be contained. However, we would wait to see if the new business pipeline improves significantly enough on an organic basis in FY2008. As a result of weaker near-term growth prospects, we maintain our Hold rating and reduced target price of $3.25.

Costs Affecting China Southern

China Southern (ZNH) recorded a sharp profit increase in the third quarter, mainly due to strong passenger demand and the Chinese currency's appreciation over US dollars. Volatile fuel prices and lower operating efficiency still hurt China Southern's operating performance.

As China's largest carrier, China Southern is well positioned to leverage the growth potential of aviation industry in China. Other factors including appreciating Chinese currency and speculation of strategic partner also support its stock price. We think its current price fairly reflected most factors.

Therefore, we are maintaining Hold recommendation for its stock price. The stock is currently trading at 61.8x our estimate for fiscal year 2008 earnings per share, which is significantly higher than the industry mean. Its P/B ratio is similar to the industry mean and is significantly lower than that of its Chinese peers. Using a P/E multiple of approximately 65.0x our fiscal year 2008 earnings per share estimate yields a target price of $35.00, which we believe reflects the company's growth prospects.