Zacks Analyst Blog Highlights: Amdocs, Sprint Nextel, Tweeter Home Entertainment, Best Buy and Wal-Mart.

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: Amdocs (NYSE:DOX), Sprint Nextel (NYSE:S), Tweeter Home Entertainment (Nasdaq:TWTR), Best Buy (NYSE:BBY) and Wal-Mart (NYSE:WMT).

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2673

Here are highlights from Wednesday's Analyst Blog:

Amdocs Impresses

We are maintaining our Buy recommendation for Amdocs (NYSE:DOX) following the company's impressive second quarter earnings release. Revenue and diluted EPS (including acquisition related costs) increases 23% and 11.8% respectively during this quarter over the prior-year quarter. Amdocs has the largest customer base and the broadest product line in the industry, which helps it to gain further business associated with telecom consolidation. In the second quarter of 2006, the company was awarded eleven new key contracts including Sprint Nextel (NYSE:S) to support their 45 million wireless subscribers. Recent diversification into non-telecom related areas, such as CRM software and financial services outsourcing are showing encouraging signs of initial success, which could provide another avenue of potential business growth.

The company is a beneficiary of the long-term trend toward information technology (IT) outsourcing. The firm's principle marketing efforts continue to be targeted toward leading companies in the communications sector. By offering a "total systems solution," consisting of its integrated customer management products, along with its specialized services, DOX has been able to steadily gain market share against a handful of competitors.

The global economic recovery has resulted in a healthier environment for IT spending, which has boosted Amdocs' performance. What's more, telecom capital spending has picked up after several lean years. Armed with a healthy backlog and a solid pipeline of potential deals, DOX has experienced healthy growth in 2005. Since a majority of its revenue is generated from wireless carriers, an increase in the carriers' rate of capital spending, spurred by the deployment of third generation (3G) wireless services, is expected to fuel future growth. Amdocs is also winning more than its fair share of contracts from the major wireline carriers, which are concentrating on growth prospects in broadband data services.

Tweeter Still Has Issues

Strong sales of flat-panel television sets continue to mask many of the issues plaguing Tweeter Home Entertainment's (Nasdaq: TWTR) business model. The company beat our estimates for the second quarter, and we increased our 2006 and 2007 EPS estimates. We still think Tweeter has a long way to go to complete a successful turnaround, but the company is laying the groundwork to be a profitable niche player in the highly competitive retail electronics business. We maintain our Hold rating and increase our target price to $9.50.

Tweeter is a relatively small consumer electronics retailer. According to the Consumer Electronics Association, the overall industry has roughly $100 billion in sales, and Tweeter accounts for less than 1% of that total. Several large players, including Best Buy (NYSE:BBY) and Wal-Mart (NYSE:WMT), dominate the industry and have significantly greater resources than Tweeter. While Tweeter does not compete with these larger companies in all product categories, there is an increasing overlap in the high-end merchandise (more sophisticated with more features and options) as competitors offer more upscale products. As competitive pressures mount, Tweeter's customer traffic and profit margins may suffer. In the short term, however, the demand for high-end televisions will most likely mask this problem, as price points drop on the popular flat-panel, high-definition television sets.

What's more, Tweeter's balance sheet is still highly leveraged, despite recent improvement. The company ended the second quarter of fiscal year 2006 with $4.4 million in cash and $43.5 million in long-term debt.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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