We continue to rate shares of Exar a Hold and advise investors to wait for a turnaround in the market conditions which should happen in the not-too-distant future.

Small-Cap OPNET Kept a Buy

OPNET Technologies, Inc. (OPNT) posted results in-line with guidance for the third quarter of fiscal 2008. Although slightly below our expectations, we are encouraged that new license revenue has grown sequentially for the second consecutive quarter and revenue from the enterprise market is growing, offsetting weaker government business.

We reiterate our Buy rating on OPNT with a reduced price target of $14 to reflect a subdued market for tech stocks. Given that OPNET won't likely be approaching normalized profitability margins for several years, we believe a P/S metric is the best valuation for the stock. With a P/S multiple of 1.9x current year estimates and 1.7x FY 2009 estimates, OPENT has the one of the lowest multiples of its peer group.

Although we believe investors will likely be somewhat restrained until the company demonstrates some operating leverage with its business model by growing new license revenue and working through dilution from Network Physics, we do believe that the stock should approach the mean of its peer group and is protected on the downside with $4.03 in cash and investments per share.

If we exclude amortization of acquired technology, a non-cash charge, the company should generate approximately EPS of $0.45 in fiscal 2009. On this basis, the stock is currently trading at 20.9x our EPS estimate. Our $14 price target represents a P/S [price-to-sales] multiple slightly above its peer group, and maintain a Buy rating on OPNET shares.

Bet on Sangamo Finding Partners

Sangamo Biosciences, Inc. (SGMO) uses a proprietary ZFP gene regulation technology to discover and develop a new class of therapeutic candidates for diabetic neuropathy, cardiovascular disease, cancer, and immune diseases. We are optimistic about this novel technology and are encouraged to hear that the company intends to bring more drug candidates into the clinic in 2008. We are also impressed by the company's strategy to monetize this ZFP technology.

We maintain our Buy rating on shares of Sangamo with a price target of $18. Our Buy call is based on the progress the company has made for both its clinical and preclinical programs using its proprietary ZFP platform technology. Also the agreements with Dow AgroSciences, Genentech, Inc. (DNA) and Sigma-Aldrich Corp. (SIAL) add value to the company.

2007 was an eventful year for the company. Sangamo currently has three phase II trials under way and will add another phase II and two phase I trials in 2008. With a total of eight clinical programs and the proprietary platform technology, we believe the company should be easy to find partners in the coming quarters.