We have valued Lincoln Electric using the P/E valuation metric and forward earnings estimates. At its current price, LECO trades at a P/E of 14.7x our FY08 EPS estimate of $5.49. LECO has a multi-year strategy to become more cost competitive. Our target price is $82.00, which is 14.9x our FY08 estimate of $5.49.

Hologic Acquisitions to Take Time

Hologic, Inc. (HOLX) reported Q3 EPS that beat our estimate by $0.03 on revenue that was below our forecast. We lowered our FY08 revenue estimate but increased our FY08 EPS estimate. We lowered our FY09 revenue and EPS estimates. The management lowered FY08 revenue guidance and narrowed FY08 EPS guidance.

HOLX completed the acquisition of Third Wave Technologies on July 24. This is expected to dilute FY08/FY09 EPS and be accretive thereafter. Our price target is based on a P/E multiple of roughly 17x 2009 EPS estimate.

HOLX believes its latest acquisitions allow it to offer customers a broader array of breast imaging and diagnostic products. The Fischer acquisition broadens HOLX?s technology base in digital mammography and breast biopsy systems.

The AEG acquisition provides HOLX with control over the coating for its digital detectors, a critical step in the detector manufacturing process. The R2 acquisition added a line of CAD systems for both screen-film and digital mammography to HOLX?s portfolio of products. Suros brings a full line of breast biopsy devices for use with stereotactic, ultrasound, or MRI guidance systems. Although initially dilutive, the acquisition of Third Wave Technologies is expected to help drive EPS higher starting in fiscal 2010.

The company believes that the significant reductions in reimbursement rates proposed for the use of several of its products have had and may continue to have a material adverse affect on the sales of those products. Recent proposed changes to reclassify full-field digital mammography to permit 510(k) clearance could increase competition for HOLX?s digital mammography products.

Ardea Biosciences Still Developing

Ardea Biosciences, Inc.?s (RDEA) lead drug candidate is RDEA806 which is under phase II studies for HIV and phase I for gout. Another candidate is RDEA119 under phase I studies for cancer indications. We are concerned about the weak pipeline and early stage of development. Competition in the HIV and cancer markets, combined with the cash burn concern make us believe Ardea?s risk/reward is balanced. We maintain a Hold rating on the stock.

Ardea is still a development stage company. The company has been incurring operational losses since its inception. There is no product revenue currently, and the company depends on equity and debt financing to fund its drug research and development activities. We expect Ardea to continue to incur operating losses and not to receive any product revenue in the foreseeable future, other than milestone payments from Valeant research projects currently underway.

The management anticipates 2008 net cash usage to be between $45 million and $50 million. Therefore, we estimate the company needs to tap capital market sometime in late 2008 or early 2009. Any equity offering will further dilute shareholder base. At our price target of $16 per share, the market cap for Ardea is $162 million. We think this is fare to Ardea based on the fundamentals of the company.

Gafisa S.A. Building on Success

We are keeping our Buy recommendation on Gafisa S.A. (GFA), one of the market leaders in the construction/incorporation business in Brazil.? The company?s second quarter 2008 results were again very positive.