Zacks Analyst Blog Highlights: 3Com Corporation and W.R. Berkley.CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: 3Com Corporation (Nasdaq: COMS COMS 3Com Corporation (stock symbol) COMS Certified Orientation and Mobility Specialist COMS Continuous Opacity Monitoring Systems COMS City of Manchester Stadium (UK) ) and W.R. Berkley (NYSE NYSE See: New York Stock Exchange : BER (1) (Basic Encoding Rules) A set of encoding rules for ASN.1 notation, which is a method for defining data structures. See ASN.1. (2) (Bit Error Rate) The average number of bits transmitted in error. See BERT. 1. ). See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673 Here are highlights from Tuesday's Analyst Blog: Competition Gets Fierce for 3Com Though 3Com Corporation (Nasdaq: COMS) has posted growth in its core networking business as well as in security products acquired from TippingPoint, we are cautious on the outlook of the company given the recent purchase agreement of the H-3C joint venture. The stock's valuation has been supported by a strong net cash position of $2.20 per share, which will be at least partially lost following the transaction. Moreover, 3Com will likely compete head-to-head with Huawei after the non-compete agreement expires. We, therefore, reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it our Sell recommendation on the shares of COMS with a target price of $3.50. This joint venture deal has increased both execution and financing risk. As such, we revert back to our price by sales model. Although we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op on the success at TippingPoint along with improved cost cutting efforts, this still has a long way to go as its legacy business remains a drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. results. Hence, we reiterate our Sell recommendation on the shares of 3Com with a six-month target price of $3.50, which is based on a P/S P/S See: Price to sales [price-to-sales] multiple of approximately 1.0x our 2007 revenue estimate of $3.41 per share. W.R. Berkley Expected to Outperform Results for 4Q06 were basically in line with expectations. W.R. Berkley (NYSE: BER) continues to enjoy a broadening of premiums, underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. and investment income. Consequently, the company is positioned to continue generating an above 20% ROE [return on equity]. While the shares trade at a significant premium valuation to its peer group, we think this premium is warranted and reflects Berkley's substantially superior historical and projected ROE. In turn, we think the stock can outperform the group with less downside risk Downside Risk An estimation of a security's potential to suffer a decline in price if the market conditions turn bad. Notes: You can think of this as an estimate of the amount that you could lose on a stock or other investment. . We adjusted our 2007 earnings expectation and installed our 2008 earnings expectation to reflect 4Q06 results. At the current price level, the shares of W.R. Berkley trade at 1.87x its 4Q06 book value of $17.30 per share, well at the upper-end of its 10-year historical 0.9x to 2.1x range and a substantial premium to its peer group, although the multiple has contracted from 2.85x about a year ago and the 2.30 2.40x range of late. On a forward price/earnings basis, the company is also trading at a premium to its peer group. We believe the shares deserve to trade at a premium given the company's superior and relatively consistent ROE. See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645 About Zacks Equity Research Zacks Equity Research provides the best of quantitative and qualitative analysis Qualitative Analysis Securities analysis that uses subjective judgment based on nonquantifiable information, such as management expertise, industry cycles, strength of research and development, and labor relations. to help investors know what stocks to buy and which to sell for the long-term. Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons. Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; this free newsletter today by visiting http://at.zacks.com/?id=2674. About Zacks Zacks.com is a property of Zacks Investment Research Zacks Investment Research A firm that compiles earnings estimates and brokerage firm investment recommendations for thousands of publicly traded firms. , Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros. |
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