Scientific Games is currently selling at 20.6 times trailing 12-month earnings. Over the last few years, the stock has traded in a wide P/E range of 16 to 38. Recent dilutive acquisitions and the company's leveraged balance sheet somewhat mitigate the company's international expansion initiatives, cost containment efforts, and share repurchase program. The six-month target price of $33.50 is based on a 30 P/E multiple on trailing 12-month earnings.

Philip Morris Not Quite on Fire

Philip Morris International, Inc. (PMI) has a history of strong operating and financial performance. The management has a credible strategy of growing EPS in the range of 10% to 12% and returning a substantial portion of the New York-based cigarette maker's cash flow to shareholders.

The stock of Philip Morris International has only been trading since the end of March this year. However, PMI has experienced an adverse mix shift as lower margin markets have grown faster than the company's average. In addition, the company is exposed to risks from litigation, higher excise taxation, and increased smoking restrictions. Having followed the tobacco industry for two decades, the stock should trade at a slight premium to Altria's (MO) stock, which has traded in a P/E multiple range of 6 to 18 over the last 10 years.

The stocks of tobacco companies have maintained a low P/E due to the aforementioned issues and have been pressured down to a single-digit P/E during times of court case losses and of excise tax increases. We expect PMI's stock to trade in a P/E multiple range of 10 to 17. With the stock in the upper-end of the expected valuation range, the Hold rating is maintained. The target price of $54.75 is 16.5 times our year-end 2008 earnings estimate of $3.32.

Cleveland Bio a Biodefense Play

Cleveland BioLabs (CBLI) is a drug discovery and development company, utilizing its discoveries regarding apoptosis to treat cancer and protect normal tissues from exposure to radiation and other stresses. The Buffalo, New York company is developing its compounds for Biodefense, treatment of cancer and tissue protection due to external stress.

The company has developed the Protectan and the Curaxin series of compounds based on the concept of apoptosis, or programmed cell death. The safety profile exhibited by these compounds in preclinical and animal studies along with the expedited development status granted to them further enhances our conviction in the future prospects of the company. We expect the company to launch one of these compounds in 2010.

We are excited about the company's robust pipeline of clinical candidates, its unique positioning, and the immense market potential if the company can successfully develop and commercialize the compounds. We maintain our Buy rating on the stock with a target price of $6. We arrive at our target price by applying a P/S multiple of 8x to the 2011 revenue of $32.35 million, discounted back at 25 percent for 3 years.