Analysts like outlook for temp firm On Assignment.

Looking for somebody to determine the calorie content of your beer? On Assignment Inc. has your scientist. The Calabasas-based biotech staffing firm specializes in placing trained scientists on a temporary basis at breweries, high-tech firms, pharmaceutical houses and other businesses involved with research and development.

These companies often need people to work on specific projects - but once that project is over, the scientists are no longer needed.

Its stock is on a rebound. rising by 32 percent in the past month to close at $29.44 on July 27. Still, it's trading 17 percent below its 52-week high - perhaps a reflection of the general drop-off in the staffing industry.

While a tight labor market has increased the demand for temporary personnel, it has also hit temp agencies with the same problem facing large employers: a lack of qualified workers. The result is that temp agencies are growing more slowly than in the past. Meanwhile, more competitors have entered the business.

"(On Assignment's) stock got dragged down by the group of (temporary employment agency) stocks," said Judith Scott, a managing director for Robert W. Baird & Co. in Milwaukee. "We've seen some bellwether companies like Robert Half International decelerating quickly. Modis is trading 60 percent below its year high. When companies like that go down, it drags other high flyers down."

Still, On Assignment has posted year-over-year earnings increases every quarter for the past 13 quarters. For the three months ended June 30, it had net income of $3.5 million (31 cents per diluted share), compared with $2.7 million (24 cents) for the like period a year earlier.

It also has a "stick rate" - the percentage of employees placed who stay for the contracted term - of 93 percent, compared with the industry standard of 50 percent.

"They are the premier source of those types of skill-sets they serve, and their competitors don't come close," said John Schneller, an analyst at Stephens Inc. in Boston. "Other players are commodity bodyshops, and On Assignment distinguishes itself with high-quality service and focuses on internal growth. They grow organically rather than through acquisitions, which keep costs down."

Customers include major companies in industries ranging from petrochemicals and food to pharmaceuticals and biotechnology. Clients have included the likes of Hewlett. Packard Co., 3M, Bausch & Lomb and Coors.

When companies hire a lab temp, they pay On Assignment anywhere from $10 an hour for technicians to $25 an hour for microbiologists with several years of experience. Typically, workers are delivered within 24 hours.

Founded as Lab Support Inc. by two Woodland Hills chemists in 1985, the start-up was backed by Wood River Capital Corp., a New York venture group. It stumbled when it expanded into other areas like consulting and recruiting. Just four years later, it had ratcheted up losses of $1.5 million on a meager $7 million in revenues.

Current Chairman and Chief Executive H. Tom Buelter was then hired and took the company out of the consulting and recruiting businesses. He renamed it On Assignment before taking the company public in 1992.

Analysts say the key is a simple business model.

"They send a person over there on a shoestring budget to build clients with minimal costs." Scott said. "They don't start off with flashy headquarters. In the U.K. they opened three branches at $75,000 compared to typical new branches which can run up to $250,000."

More branches will debut over the next year in Belgium and Germany. "European expansion makes sense for us since so many of our clients have offices abroad," Buelter said.

Expansion appears to have been met with approval from Wall Street. Schneller has a price target of $40 on the stock by the end of the year and estimates earnings per share at $1.27 this year and $1.60 in 2000.

On Assignment Inc.

YEAR (Dec. 31)                         1998           1997

Revenue (millions)                   $132.7         $107.8
Operating Costs (millions)             25.3           20.7
Operating Income (millions)           107.4           87.1
Net Income (millions)                  11.3            8.3
Earnings Per Share                    $1.00          $0.75

SUMMARY

Business: Temporary staffing Headquarters: Calabasas CEO: H. Tom Buelter Market Cap: $332.2 million Dividend Yield: N/A(*) Total Liabilities: $10.5 million P/E Ratio: 24.2 Long-Term Debt: None

* On Assignment does not pay dividends.