Further writedowns and losses are likely given continued turmoil in the credit markets.

Currently, UBS is trading at 6.8X the consensus estimate for 2009, a 19 percent discount (versus an 18 percent discount in our last report on June 23, 2008) to its industry peers price/earnings (P/E) ratio of 8.4X, based on 2009 consensus estimates. Given the cloudy outlook for UBS's near-term earnings due to our expectation for continued weakness in the company's US real estate and related investment portfolios, we believe the shares are fully valued. Our $22 target price represents an 8.4X P/E of our 2009 earnings estimate of $2.65 per share, roughly in line with the median for the industry.
Skechers Wants Kid Wheels

You know those kids' sneakers that double as a sort of "heel wheel" roller?? They're called HEELYS.? And today Heelys, Inc. (HLYS) received a buyout offer from Skechers (SKX) of $5.25 per share.? This was after the company rejected a $4.75-5.10 offer in late May, according to a Bloomberg report out today.

Bargain hunters who picked up HLYS shares after the stock plummeted from its 52-week high of just over $10 per share last October can pop the champagne today; HLYS is up over 10 percent?as of mid-day?to $5.40 per share, with some buzz that the buyout offer may even go higher.

For Skechers, though the news has prompted shares to sell off close to 2 percent so far today, the company is clearly looking to increase its retail sales numbers.? In the past month, 5 analysts have lowered earnings estimates for the coming September quarter, fiscal year 2008 and fiscal 2009.? This follows a June quarter where the company posted an 11 percent negative earnings surprise.? SKX shares currently have a Zacks Rank #3 (Hold) with a $21 target.

Alkermes: Near-Term Difficulties

Alkermes, Inc.?s (ALKS) expertise in the area of drug delivery has allowed it to develop a pipeline of extended-release injectable and pulmonary drug products for the healthcare industry. While Lilly?s (LLY) termination of the AIR Insulin program is a major blow to the company?s clinical pipeline, we are optimistic about a number of mid-to-late-stage candidates.

Termination of the AIR Insulin program has resulted in a loss of annual research and development funding of over $50 million for Alkermes. This loss will see the company?s revenues declining by over 7 percent in fiscal 2009. However, Alkermes is confident of achieving its stated goal of an EPS of $2.00 - $3.00 in 2013.

For this to happen, we believe that the company will need to cut down on its research and development funding after fiscal 2010 while simultaneously engaging in share repurchases of at least 5 million shares annually after fiscal 2010. Also, Alkermes? revenue needs to grow from an estimated $223 million to $440 million in fiscal 2009 at a required compound annual growth rate of 218.5 percent.

We believe that while the company may have plenty of catalysts lined up in the coming 12 months, its financial performance could well dampen investor spirits. Alkermes is also subject to heightened risks of additional pipeline failures that may hamper its progress towards its stated goals. As such, we maintain our Hold rating on the stock with a target price of $18. Our target price corresponds to a P/E ratio of 38x our estimated 2011 EPS of $0.65 per share, discounted at 15 percent for two years.

Ev3 Sales Environment Challenges

Ev3 Inc. (EVVV) reported second-quarter revenue ahead of our estimate, and loss per share below our estimates. However, a challenging sales environment persists, related to disruptions in U.S. sales force integration belonging to the FoxHollow acquisition and inventory-build at customers. Merck (MRK) cancelled its research collaboration contract, offset by higher product sales.

The company maintained its 2008 revenue and adjusted EPS outlook. We believe Ev3 will be able to slowly build momentum in the second half of 2008. We remain in-line with the management?s annual guidance, expecting the company to earn $0.04 adjusted EPS per share on $426 million in revenue. Our 2009 EPS expectation moves to $0.55 on $500 million in revenue.

The market is growing as there is an increasing demand for minimally invasive treatment of vascular diseases and disorders. Vascular disease and its pre-cursors affect over 90 million people in the United States and more than 1.0 billion people worldwide. Given the strong product offerings, Ev3 expects its neurovascular division to grow faster than the 20 percent overall expected market growth rate in 2008.

At the current price, EVVV trades at 2.9x 2008 revenues, at a 13 percent premium to comparables. Although making progress, we believe the company is appropriately valued at a 15 precent discount to the industry averages given the poor to-date execution and possible continued expected integration difficulties. Our target moves to $12.