Zacks Analyst Blog Highlights: NMS Communications Corp., American Axle & Manufacturing Holdings, Inc., General Motors Corp., Hewlett-Packard Co. and Fifth Third Bancorp

Business Wire, August 20, 2008

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: NMS Communications Corp. (Nasdaq: NMSS), American Axle & Manufacturing Holdings, Inc. (NYSE: AXL), General Motors Corp. (NYSE: GM), Hewlett-Packard Co. (NYSE: HPQ) and Fifth Third Bancorp (Nasdaq: FITB).

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Here are highlights from Tuesday's Analyst Blog:

NMS Comms Target Reduced

We maintain our Hold rating, but reduce the valuation target for NMS Communications Corporation (Nasdaq: NMSS), an applications provider for value-added services in mobile communications.

This follows second quarter 2008 financial results that were well below our estimates. Revenue from its newly acquired LiveWire Mobile segment was impacted by delays in revenue recognition associated with several capital expenditure deals. We believe softness in product demand will continue in the second half of the current fiscal year as a result of weak global economic indicators.

American Axle Needs Realignment

Weak SUV demand is greatly affecting American Axle & Manufacturing Holdings, Inc.'s (NYSE: AXL) sales. Furthermore, high commodity costs and pricing pressure as well as production cuts by original equipment manufacturers (OEM) such as General Motors (NYSE: GM) remain causes for concern. Thus, we rate the stock a Sell and set a six-month target price of $4.

The present North American automotive industry conditions characterized by slow car sales, production cuts, excessive inventories, rising commodity costs, and market share losses of leading U.S. automakers, are affecting the company negatively.

Hewlett-Packard No Longer a Buy

Although we expect Hewlett-Packard Company (NYSE: HPQ) to post Q3 results that meet or exceed expectations, we are concerned that several factors will cause revenue to slow in the future.

First, HPQ's acquisition of EDS should close shortly, and adds a slower growth company to its revenue base. Next, although HPQ has benefitted from 65% of its revenue coming internationally as the global economy has outgrown the US. We expect this trend to reverse itself, meaning that companies with greater domestic exposure will perform better. We therefore downgrade HPQ shares to Hold with a $48 price target.

Fifth Third Estimates Cut

We maintain our Hold recommendation on the shares of Fifth Third Bancorp (Nasdaq: FITB). The company reported GAAP earnings loss of $0.37 per share compared to $0.69 per share in the prior-year quarter, driven by charges related to tax treatment of leveraged leases.

FITB currently trades at 12.9x the consensus forward estimate, a 4% discount to the peer group median. On a price-to-book basis, the shares trade at 6% discount to the peer median, versus 6% premium previously. Relative pricing now looks expensive on a P/E-to-growth (PEG) basis, using the consensus forward estimate and the consensus long-term growth rate.

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