The company has been targeting the telecommunications industry and has been deeply involved in re-tooling its legacy infrastructure. As per IDC, the worldwide market for telecommunications infrastructure equipment will exceed $109.9 billion in 2011, increasing at a five-year compound annual growth rate (CAGR) of 4.2%.

Optical networking will reach $13.7 billion and the access market $8.5 billion by 2011, driven by demand for broadband, VoIP and triple-play services. According to Gartner Group, the total amount of shared network storage is expected to grow at a rate of almost 70% per year during 2005-2009.

Hospira Hold-Rated, Target Upped

Hospira (HSP) reported Q2 EPS that were lower than our estimate by $0.04 on sales that were significantly below our forecast. We increased our FY08 sales and EPS estimates. Our price target is based on roughly 15x FY09 EPS estimate.

Management also revised its FY08 guidance.' The global specialty pharmaceutical and medication delivery company'dealing with'acute care has been trading in the high-$30s range since a much more volatile fluctuation in previous years.

At its current price of $39.74 per share, HSP is trading at roughly 14x our 2009 EPS estimate of $2.82, which is at a discount to the group average multiple of roughly 17x. As a result of its completed acquisition of Mayne Pharma, the high debt load to finance the transaction and execution are the risks that are expected to pressure multiple expansion.

The company continues to progress with its manufacturing optimization initiative and expects to complete integrating the acquisition by the end of the year. The company must continue to successfully launch new products. The company continues to face increasing competition for sales of Vancomycin, its largest selling drug in the U.S. Our price target is $42.00.

McDonald's Keeps On Cooking

McDonald's Corp. (MCD) reported much stronger-than-expected August same-store sales numbers, lapping very strong comparables and surpassing our expectations. We continue to view the stock as a good defensive investment and expect steady mid-to-high-single digit earnings growth, fueled by margin expansion and a trade-down from casual dining in an economically weakening Europe, unit growth in AMPEA, the rollout of high-end coffees system-wide, and share buybacks.

We note that worse-than-expected headwinds from a strengthening dollar, rising beef prices and slowing Asian economies pose downside risks to our estimates.' Nevertheless, we think this stock provides relative safety and moderate growth and yield in a turbulent environment and exposure to faster-growing international markets. Our rating remains Buy with a six-month target price of $68.

Cleveland-Cliffs Still Climbing

Rising prices and strong demand are pushing Cleveland-Cliffs, Inc.'s (CLF) performance. Robust industrial growth in China and India has triggered demand for steel, resulting in higher demand for iron ore. The company's portfolio of established and recent iron ore and metallurgical coal assets positions it to capitalize on global industry dynamics in 2008 and beyond.

Moreover, the merger with Alpha Natural Resources (ANR) will help Cliffs to meet the increasing global demand for coal, consolidate the supplier base, and generate substantial free cash flow. We also believe the strong commodity price regime should significantly boost revenues for Cliffs. As a result, we rate the shares a Buy with a target of $85, which is 11.5x our 2008 estimate.

Prices for iron pellets continue to move up in 2008. Cliffs's managed iron ore pellet production in North America is expected to be 35.6 million tons in 2008. The company s share of this production is expected to be 24 million tons. Further, the company expects to increase this share to 33 million tons in 2009.

In 2008, North American iron-ore sales are estimated at 25 million tons as it sells down through some inventory, with revenue per ton of $90. For 2008, the Asia-Pacific Iron Ore segment's expected production volume is 7.8 million tons and sales volume is 8 million tons. The company expects Asia-Pacific revenue per ton to be $102. This estimate assumes 80% and 97% increase in the 2008 international settlement price for fines and lump respectively.

Marlin Biz Services: Throw It Back

Marlin Business Services Corp's (MRLN) 2Q08 earnings of $0.14 per share were three cents below the consensus as well as our estimates.

We suspect the weakening economy will continue to impact the new originations, and the delinquencies will continue to rise through 2008. MRLN recently opened its industrial bank, which will lower the cost of funding however we do not expect any significant impact on the earnings in the current year. Based on the results and our concerns for further deterioration in growth and credit quality, we have lowered our FY08 and FY09 estimates to $0.58 and $0.82 per share, respectively.

MRLN currently trades at 9.3 times the consensus forward estimate, a 29% discount to the peer group median. On a price-to-book basis, the shares now trade at a 52% discount to the peer median, versus a 59% discount in June.