Zacks Analyst Blog Highlights: Avnet, AMD, Intel and Edison International

Business Wire, March 13, 2007

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: Avnet (NYSE: AVT), AMD (NYSE: AMD), Intel (Nasdaq: INTC) and Edison International (NYSE: EIX).

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

Here are highlights from Monday's Analyst Blog:

Downgrading Avnet to a Sell

Avnet (NYSE: AVT) is one of the largest distributors of electronic components and computer products. December quarter revenue was in-line with the consensus, while the EPS [earnings per share] exceeded. Forward guidance is for 5-10% increase in the March quarter. Microprocessor sales plummeted, and the core TS business is expected to experience typical weak seasonality in the next quarter.

Operating margins remain attractive at both units. The company has taken on a further $300 million to fund the Access Distribution acquisition. We are downgrading the shares to a SELL in view of various issues in the core business, the high level of debt and the rich valuation.

Management stated that the price war between AMD (NYSE: AMD) and Intel (Nasdaq: INTC) was leading to volatility in the microprocessor market. The AMD business is more profitable than the Intel business, according to management. This has caused management to de-emphasize the Intel business.

However, the company maintains its relationship with Intel, which could once again become an important customer. The weakness in microprocessors caused management's expectations to go somewhat awry. The very strong growth expected in the Asia/Pacific region did not in fact materialize, while the growth in the EMEA [Europe, Middle East and Africa] region outstripped other areas. The guidance indicates that excluding the Access contribution, TS revenue is expected to be down 24.9% to -18.5%.

Bullish on Edison International

Strong projected earnings growth in 2007-08, led by improved performance in unregulated power generation, energy trading, solid and stable utility operations, renewable energy generation, as well as ongoing transmission improvement projects and balance sheet strength are largely responsible for our bullish outlook on Edison International (NYSE: EIX).

Accordingly, we maintain our BUY recommendation on EIX with a six-month target price of $52.50. Price appreciation to our near-term valuation, coupled with the stock's recently increased $0.29 per share quarterly dividend - which we view as very sustainable and secure, given low projected payouts - represents annualized total return potential of 17.6%.

In Southern California, EIX has the competitive advantage of being the largest player in the field of renewable energy, with 23% of sales during the summer months coming from renewable energy sources. This further consolidates the company's position as the leading U.S. purchaser of electricity produced from alternative sources (i.e., hydro, wind, solar, etc.). This milestone is ahead of California's minimum requirement that companies generate 20% of energy from renewable energy sources by 2017.

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

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