ZOLL Medical Taking Heart

ZOLL Medical Corporation (ZOLL) designs, manufactures and markets non-invasive cardiac resuscitation solutions. These solutions include defibrillation devices with/without the pacing option, such as ZOLL's M Series, E Series, R Series, AED Plus, AED Pro, and LifeVest Wearable Defibrillator.

We previously increased our FY08/FY09 revenue estimates and increased our FY09 EPS estimate. Management previously increased its FY08 revenue guidance and revealed preliminary FY09 guidance. As in FY07, management expects operating expense leverage to again support earnings growth in FY08/FY09.

An economic downturn in any market in which ZOLL sells its products may have a significant impact on the ability of customers, in both the hospital and pre-hospital markets, to secure adequate funding to buy ZOLL's products or might cause purchasing decisions to be delayed. We believe the stock is appropriately valued at around 23x FY09 EPS estimate or around 0.9x FY09 P/E/G. Our price target is $32.00 and our recommendation is Hold.

Orchid Cellmark a DNA Play

Princeton, NJ-based Orchid Cellmark, Inc. (ORCH) is a leading provider of DNA testing services for forensic, human identity and agricultural applications in the U.S. and the U.K. The company recently expanded its reach in the U.S. with the acquisition of Reliagene in October 2007. The company is now leveraging its expertise in DNA testing to enter into new markets like pork traceability, immigration testing and security applications.

The company has won a major part of the mega tender in the U.K., which will result in annual revenues of $10 million for the next 3 years. As such, we maintain our Buy rating on the stock with a target price of $6.00.

Going forward, we expect the company to garner a significantly larger chunk of the market share in the areas where it currently offers its DNA-based testing services. The higher penetration will be facilitated by growing awareness among people about the validity of DNA testing along with the company's established reputation and brand.

Charlotte Russe Stays a Sell

Charlotte Russe Holdings, Inc. (CHIC) is a mall-based specialty apparel retailer, which carries both branded and private-label merchandise, targeting women in their teens and twenties. The retailer offers a broad assortment of fashionable merchandise.

We reiterate our Sell rating on Charlotte Russe shares. In July, the company reported soft results for the fiscal third quarter and issued disappointing guidance for the fiscal fourth quarter. Economic conditions have worsened in the last two months, which has added to Charlotte Russe's problems.

We are again reducing our estimates. Our fiscal 2008 EPS estimate goes from $1.18 to $1.16, and our fiscal 2009 EPS from $1.00 to $0.94. CHIC shares may look cheap at these levels, but we expect further deterioration in its business. Our estimates are well below the consensus view, and we expect consensus estimates to continue falling over the next few months.

Hoku Traction 1-2 Years Away

Hoku Scientific, Inc. (HOKU), based in Kapolei, Hawaii, engages in the design, development and manufacture of Membrane Electrode Assemblies (MEAs) and non-fluorinated membranes for Proton Exchange Membrane (PEM) fuel cells. Hoku Solar markets and installs turnkey photovoltaic (PV) systems in Hawaii.

HOKU's $1.7 billion of polysilicon order backlog for up to 10 years from four solar companies represents a great growth story.