Value Line Sample Feb 2009

THE ALUE LINEInvestment Survey®

Part 3

Ratings&

Reports

PAGE PAGE

© 2009, Value Line Publishing, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHERIS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for each subscriber’s own, non-commercial, internal use. No part of this publicationmay be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.See back cover for important disclosures.

AUTO & TRUCK INDUSTRY .............. 101Daimler AG ....................................... 102Federal Signal Corp. ........................ 103Ford Motor ........................................ 104General Motors ................................. 105Honda Motor Co., Ltd. (ADR) .......... 106Navistar International Corp. ........... 107Nissan Motor Co., Ltd. (ADR) ......... 108Oshkosh Corp. ................................. 109PACCAR, Inc. ..................................... 110Tata Motors Ltd. ................................ 111Toyota Motor Corp. (ADR) ................ 112Wabash National Corp. ..................... 113

PRECISION INSTRUMENTINDUSTRY ............................................. 114

Agilent Technologies, Inc. ................. 115Analogic Corp. ................................... 116

★ Axsys Technologies, Inc. ................... 117Bruker Corporation ........................... 118Checkpoint Systems .......................... 119Cognex Co. ........................................ 120Coherent, Inc. ................................... 121

★ Dionex Corp. ..................................... 122Eastman Kodak ................................ 123FARO Technologies, Inc. .................. 124FEI Company .................................... 125GSI Group, Inc. ................................. 126Hutchinson Technology .................... 127II-VI Inc. ........................................... 128

★ K-Tron International, Inc. ............... 129KLA-Tencor Corp. ............................. 130Keithley Instruments, Inc. .............. 131

★ MTS Systems Corp. .......................... 132Mettler-Toledo Int’l .......................... 133

★ Millipore Corp. .................................. 134National Instruments Corp. ............ 135Newport Corp. .................................. 136

★ OSI Systems Inc. .............................. 137Orbotech Ltd. .................................... 138PerkinElmer, Inc. ............................. 139Rofin-Sinar Technologies, Inc. ......... 140Thermo Fisher Scientific Inc. .......... 141Tollgrade Communications .............. 142Varian, Inc. ....................................... 143Veeco Instruments, Inc .................... 144Waters Corp. ..................................... 145

★ Woodward Governor Company ........ 146Zygo Corp. ......................................... 147

ELECTRIC UTILITY (EAST)INDUSTRY ............................................. 148

Allegheny Energy Corp. ................... 149★ CH Energy Group ............................. 150

Central Vermont Public Service ...... 151★ Consolidated Edison ......................... 152

Constellation Energy Group, Inc. .... 153Dominion Resources, Inc. ................ 154Duke Energy Corp. ........................... 155

★ Exelon Corp. ..................................... 156★ FPL Group, Inc. ................................ 157★ FirstEnergy Corp. ............................ 158★ Northeast Utilities ........................... 159★ NSTAR .............................................. 160

PPL Corp. .......................................... 161Pepco Holdings, Inc. ......................... 162

★ Progress Energy ............................... 163

Public Service Enterprise Group ..... 164★ SCANA Corp. .................................... 165

Southern Co. ..................................... 166TECO Energy, Inc. ............................ 167UIL Holdings Corp. .......................... 168

MEDICAL SUPPLIESINDUSTRY ............................................. 169

★ Abaxis, Inc. ....................................... 170Advanced Medical Optics, Inc. ........ 171Affymetrix, Inc. ................................. 172Alcon Inc. .......................................... 173Align Technology, Inc. ...................... 174

★ Amer. Medical Systems Hldgs, Inc. . 175★★ AmerisourceBergen Corp ................. 176

★ AngioDynamics, Inc. ........................ 177★★ Bard (C.R.), Inc. ................................ 178★★ Baxter International, Inc. ................ 179

Beckman Coulter, Inc. ...................... 180★★ Becton, Dickinson & Co ................... 181

★ Bio-Rad Labs, ‘A’ ............................... 182Boston Scientific ............................... 183Cardinal Health, Inc. ....................... 184Cepheid ............................................. 185Charles River Laboratories Int’l ..... 186CONMED Corp. ................................ 187Cooper Companies, Inc. (The) .......... 188Covidien Ltd. .................................... 189CryoLife, Inc. .................................... 190Cutera Inc. ........................................ 191

★★ Cyberonics, Inc. ................................ 192★ Dentsply International .................... 193

★★ Edwards Lifesciences Corp. ............. 194ev3 Inc. .............................................. 195

★ Genomic Health ................................ 196★★ Haemonetics Corp. ........................... 197

Hill-Rom Holdings, Inc. ................... 198Hologic, Inc. ...................................... 199IDEXX Labs ...................................... 200

★ Illumina, Inc. .................................... 201★ Immucor Inc. ..................................... 202★ Integra Lifesciences Holdings Corp. 203

Intuitive Surgical Inc. ...................... 204★ Invacare ............................................ 205

Inverness Medical Innovations, Inc. 206★★ Johnson & Johnson .......................... 207

Kinetic Concepts Inc. ....................... 208LCA-Vision Inc. ................................ 209

★ Life Technologies Corp. .................... 210Masimo Corp. ..................................... 211

★★ McKesson Corp. ................................ 212Medical Action Industries ................ 213

★ Medtronic, Inc. .................................. 214★★ Meridian Bioscience, Inc. ................. 215

Natus Medical Inc. ........................... 216★ NuVasive, Inc. ................................... 217

Omnicell Inc. ..................................... 218Osteotech, Inc. .................................. 219

★ Owens & Minor, Inc. ........................ 220Palomar Medical Technologies Inc. . 221Patterson Companies ....................... 222

★★ ResMed, Inc. ..................................... 223★ St. Jude Medical ............................... 224★ Schein (Henry), Inc. ......................... 225

SonoSite, Inc. .................................... 226★ STERIS Corp. ................................... 227★ Stryker Corp. .................................... 228

★★★★★★★★★★ Rank 1 (Highest) for Timeliness.★★★★★ Rank 2 (Above Average).

In three parts: Part 1 is the Summary & Index. Part 2 is Selection & Opinion. This is Part 3, Ratings & Reports. Volume LXIV, No. 27

Published weekly by VALUE LINE PUBLISHING, INC. 220 East 42nd Street, New York, NY 10017-5891

ESPECIALLY NOTEWORTHY:

ISSUE 1Pages 100-242

File in the binder in order ofissue number, removing

previous issue bearingthe same number.

February 27, 2009www.valueline.com

★★ Thoratec Corp. .................................. 229★ Varian Medical Systems, Inc. .......... 230★ Volcano Corp. .................................... 231

West Pharmaceutical Services ........ 232★ Wright Medical Group ...................... 233

Zimmer Holdings, Inc. ..................... 234ZOLL Medical Corp. ......................... 235

SUPPLEMENTARY REPORTS .......... 242

This week, we welcome three new com-panies to the Medical Supplies Indus-try in our Investment Survey: NatusMedical Inc., Masimo Corp., andVolcano Corp., on pages 216, 211, and231, respectively.

Timely Wright Medical shares (page233) stand out as a solid investment,given that the company’s orthopedicproducts are in growing demand froma baby-boom generation that insists onprolonging its active lifestyle.

Top-ranked C.R. Bard stock (page 178)is an attractive option during this pe-riod of economic misery, thanks to itsnon-cyclical nature and strong earn-ings potential.

Stryker Corp. shares are an appeal-ing choice for both the near term andlong haul, partly due to strong financeswhich position Stryker well when con-summating acquisitions at deeply dis-counted prices. See our report on page228.

Becton Dickinson stock (page 181)exhibits potent long-term rebound po-tential in comparison with its histori-cal averages. This is an opportunitythat shouldn’t be passed up given theequity’s excellent credentials (top-ranked for both Safety and Timeliness).

Tollgrade shares may be of interest tothe venturesome, given the likely pros-pect of a higher bid by an avid suitor.See our take on its future on page 142.

© 2009, Value Line Publishing, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber's own, non-commercial, internal use. No part of itmay be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

To subscribe call 1-800-833-0046.

deflator will advance about 2.0% per year on the average. The corporateincome tax rate will be around 35%. Long-term interest rates on high-grade corporate bonds are projected to be about 6.3% in the years 2012-2014. We expect the Federal Reserve to pursue neutral-to-fairly accom-modative policies except in years in which the economy is overheating.Based on these assumptions, the Gross Domestic Product will average$16,728 billion in the years 2012-2014, a level that is about 17% abovethe estimated 2008 total of $14,281 billion.

Things may turn out differently. But in the absence of knowledge of thefuture, we use the above assumptions, which appear to be most plau-sible. Thus we are able to apply a common economic environment to allstocks for the purpose of measuring relative growth potential.

Value Line’s estimates of sales and earnings growth for individual com-panies are derived by correlating sales, earnings, and dividends to ap-propriate components or subcomponents of the Gross Domestic Product,presented below. A more detailed forecast appears periodically in Selec-tion & Opinion.

HYPOTHESIZED ECONOMICENVIRONMENT 3 TO 5 YEARS HENCE

The hypothesized 2012-2014 economic environment into which earningsare forecast is as follows: Unemployment will average 6.5% of the na-tional labor force. There will be no major war in progress at that time.Industrial production will be expanding about 4.0% per year. Inflationwill continue to be modest. Prices as measured by the broad-based GDP

Arnold Bernhard, Founder (1901-1987) Jean Bernhard Buttner, Chairman & CEO

Samuel Eisenstadt, Research Chairman Reuben Gregg Brewer, Research Director Harvey S. Katz, Managing Editor

February 27, 2009 ECONOMIC SERIES 100

Information Technology:Shawn Cohen, Chief Information Officer

Computer Services:Hassan Davis, Director, Applications & Develop.Donna Webb, Production Control ManagerAyako Tokunaga, Senior Programmer/AnalystJames Hammargren, Senior Programmer/AnalystTerry Yu, Senior Software Development/SupportLarry David, Supervisor, Computer OperationsGeorge Moy, Dir., Internet Infrastructure/NtwrksShannon Egerton, Tech SupportDesmond Eng, Tech SupportBill Mandra, Software Development Manager

Statistics:Brandon Cheatham, Stat. Research Asst.Tamika Messam, Quantitative AnalystIrina Zaydvarg, Statistics Clerk

Data Administration:Mila Grayevsky, Senior Database AnalystCurtis R. Clarke, Manager, Equity Data Div.Edith Barnor, Database AnalystDana Jones, Database AnalystPatrick G. O’Connor, Supervisor, Quality Ctrl.Frantz Goodridge, Research AssistantClive Russell, Research Assistant

Production:LeShane W. Lilly, Production ManagerMichael Manchess, Production CoordinatorWarren Tabachnick, Production Editor

Theresa Brophy, Assoc. Research DirectorCharles Clark, Assoc. Research DirectorRobert Mitkowski, Jr., Assoc. Research DirectorGeorge A. Niemond, Assoc. Research Director

Morton L. Siegel, Assoc. Research DirectorJeremy J. Butler, Asst. Research DirectorMario Ferro, Asst. Research DirectorAlan G. House, Asst. Research Director

David M. Reimer, Asst. Research Director

Harold Levine, Director, Statistical Services

Senior IndustryAnalysts:David R. CohenPaul E. DebbasWilliam G. FergusonIan GendlerRobert M. GreeneFrederick L. Harris, IIIJustin HellmanKenneth A. NugentGeorge I. H. RhoSigourney B. RomaineRandy ShrikishunCraig SiroisWarren Thorpe

Senior Analysts: Erik A. AntonsonJ. Susan FerraraJerome H. KaplanTom NikicJason A. SmithNils C. Van Liew

Analyst-Specialists: Damon ChurchwellAndre J. CostanzaIason DalavagasErik M. ManningDouglas G. MaurerLester RatcliffAdam RosnerSimon R. Shoucair

Analysts:Sharif AbdouKevin DowningBryan J. FongRichard GallagherJerry W. Gray Jr.William KuoNira MaharajMichael F. NapoliJoel SchwedOrly SeidmanDominic B. Silva

Matthew E. SpencerGarrett SussmanMary Beth Wiedenkeller

Junior Analysts:John D. BurkeMichael RattyMichael J. SheaMichael G. SwietnickiChristopher T. Wells

THESE ARE THE NATIONAL INCOME SERIES TO WHICH VALUE LINE SALES, EARNINGS, AND DIVIDEND ESTIMATES ARE CORRELATED

ANNUAL STATISTICS 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009* 2010* 2012-14*Gross Domestic Product ($Bill.) 8747 9268 9817 10128 10470 10961 11686 12422 13178 13808 14281 14097 14569 16728Real GDP (2000 Chained $Bill.) 9067 9470 9817 9891 10049 10301 10676 10990 11295 11524 11671 11414 11700 12847Total Consumption ($Bill.) 6126 6439 6739 6910 7099 7295 7561 7792 8029 8253 8276 8196 8442 9163Nonresidential Fixed Investment ($Bill.) 1038 1133 1232 1180 1072 1082 1144 1226 1318 1383 1408 1215 1300 1794

Industrial Prod. (% Change, Annualized) 5.9 4.4 4.4 -3.4 -0.3 0.6 2.5 3.3 2.2 1.7 -1.7 -3.5 2.5 4.0Housing Starts (Mill. Units) 1.62 1.65 1.57 1.60 1.71 1.85 1.95 2.07 1.81 1.34 0.90 0.56 0.95 1.80Total Light Vehicle Sales (Mill. Units) 15.5 16.9 17.4 17.1 16.8 16.6 16.9 17.0 16.5 16.1 13.1 10.5 12.7 16.0Personal Savings Rate (%) 4.3 2.4 2.4 1.8 2.4 2.1 2.1 0.4 0.7 0.6 1.7 5.6 4.2 3.0National Unemployment Rate (%) 4.5 4.2 4.0 4.8 5.8 6.0 5.5 5.1 4.6 4.6 5.8 8.4 8.9 6.5

AAA Corp Bond Rate (%) 6.5 7.0 7.6 7.1 6.5 5.7 5.6 5.2 5.6 5.6 5.6 5.5 5.2 6.310-Year Treasury Note Rate (%) 5.3 5.6 6.0 5.0 4.6 4.0 4.3 4.3 4.8 4.6 3.7 2.8 3.4 4.83-Month Treasury Bill Rate (%) 4.8 4.6 5.8 3.4 1.6 1.0 1.4 3.1 4.7 4.4 1.4 0.4 0.8 4.0

ANNUAL RATES OF CHANGEReal GDP 4.2 4.4 3.7 0.8 1.6 2.5 3.6 2.9 2.8 2.0 1.3 -2.2 2.5 3.3GDP Deflator 1.1 1.4 2.2 2.4 1.7 2.1 2.9 3.3 3.2 2.7 2.2 0.6 1.2 2.0Consumer Price Index 1.5 2.2 3.4 2.8 1.6 2.3 2.7 3.4 3.2 2.9 3.8 -0.7 2.3 3.0

QUARTERLY ANNUALIZED RATES 2008 2009 20101st 2nd 3rd 4th* 1st* 2nd* 3rd* 4th* 1st* 2nd* 3rd* 4th*

Gross Domestic Product ($Bill.) 14151 14294 14413 14265 14147 14026 14068 14148 14272 14403 14650 14951Real GDP (2000 Chained $Bill.) 11646 11727 11712 11599 11451 11364 11393 11449 11514 11586 11785 11915Total Consumption ($Bill.) 8316 8341 8261 8187 8146 8166 8207 8267 8329 8391 8450 8600Nonresidential Fixed Investment ($Bill.) 1423 1432 1426 1352 1290 1228 1179 1164 1178 1198 1300 1525

Industrial Production (% Change, Annualized) 0.4 -3.1 -8.9 -11.5 -10.0 -4.0 -1.0 1.0 2.0 3.0 2.8 2.4Housing Starts (Mill. Units) 1.05 1.02 0.88 0.66 0.50 0.52 0.55 0.65 0.75 0.90 1.00 1.10Total Light Vehicle Sales (Mill. Units) 15.2 14.1 12.9 10.3 9.5 10.0 11.0 11.5 12.0 12.5 12.8 13.0

*Estimated

8060504030252015

107.5

Percentsharestraded

453015

Target Price Range2012 2013 2014

ABAXIS, INC. NDQ-ABAX 17.25 27.0 30.3NMF 2.31 Nil

TIMELINESS 2 Raised 2/13/09

SAFETY 3 New 2/29/08

TECHNICAL 2 Raised 2/6/09BETA 1.30 (1.00 = Market)

2012-14 PROJECTIONSAnn’l Total

Price Gain ReturnHigh 40 (+130%) 24%Low 25 (+45%) 10%Insider Decisions

A M J J A S O N Dto Buy 0 0 0 0 0 0 0 0 0Options 0 2 0 0 1 0 2 1 1to Sell 0 2 0 0 1 0 0 0 0Institutional Decisions

1Q2008 2Q2008 3Q2008to Buy 90 71 57to Sell 50 56 56Hld’s(000) 20686 21957 21008

High: 3.8 8.3 11.0 6.3 7.0 21.9 23.8 18.9 26.8 40.0 38.1 19.5Low: 1.1 1.4 4.1 2.3 2.5 3.2 10.9 7.5 16.2 16.9 10.2 13.2

% TOT. RETURN 1/09THIS VL ARITH.

STOCK INDEX1 yr. -51.4 -39.33 yr. -20.6 -36.65 yr. -16.7 -18.3

CAPITAL STRUCTURE as of 12/31/08

Total Debt None

Leases, Uncapitalized Annual rentals $4.4 mill.

No Defined Benfit Pension Plan

Preferred Stock None

Common Stock 21,899,000 shares

MARKET CAP: $375 million (Small Cap)CURRENT POSITION 2006 2007 12/31/08

($MILL.)Cash Assets 45.2 24.2 74.6Receivables 16.9 20.9 21.6Inventory (FIFO) 14.8 18.7 17.1Other 10.4 2.8 4.7Current Assets 87.3 66.6 118.0Accts Payable 6.5 6.4 5.9Debt Due - - - - - -Other 6.2 7.7 6.9Current Liab. 12.7 14.1 12.8

ANNUAL RATES Past Past Est’d ’05-’07of change (per sh) 10 Yrs. 5 Yrs. to ’12-’14Sales 20.5% 16.0% 13.0%‘‘Cash Flow’’ - - 33.0% 14.0%Earnings - - - - 16.0%Dividends - - - - NilBook Value 18.5% 37.0% 15.0%FiscalYear

Begins

FullFiscalYear

QUARTERLY SALES ($ mill.) A

Jun.30 Sep.30 Dec.31 Mar.312006 20.4 21.0 22.0 22.8 86.22007 22.9 25.3 25.7 26.7 100.62008 24.6 27.7 27.0 29.7 1092009 28.0 33.5 33.5 35.0 1302010 31.0 36.5 37.5 40.0 145FiscalYear

Begins

FullFiscalYear

EARNINGS PER SHARE AB

Jun.30 Sep.30 Dec.31 Mar.312006 .10 .10 .13 .13 .462007 .14 .13 .14 .15 .562008 .12 .15 .15 .17 .592009 .14 .18 .20 .23 .752010 .16 .20 .23 .26 .85Cal- Full

endar YearQUARTERLY DIVIDENDS PAID

Mar.31 Jun.30 Sep.30 Dec.3120052006 NO CASH DIVIDENDS2007 BEING PAID20082009

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006.19 .17 .30 .61 1.00 1.03 1.48 1.83 1.87 2.07 2.40 2.65 3.42 4.07

d1.33 d1.36 d.56 d.45 d.30 d.28 .00 .08 .18 .17 1.32 .34 .48 .60d1.43 d1.24 d.65 d.59 d.44 d.31 d.05 d.09 .02 .02 1.16 .22 .35 .46

- - - - - - - - - - - - - - - - - - - - - - - - - - - -.27 .19 .06 .08 .05 .07 .13 .37 .05 .07 .07 .13 .16 .14

1.60 1.67 1.09 .79 .39 .30 .46 .76 .84 1.00 2.80 3.10 3.53 4.146.26 6.26 9.86 11.89 12.19 12.96 15.70 16.10 16.34 16.82 19.52 19.89 20.14 21.21

- - - - - - - - - - - - - - - - NMF NMF 11.0 NMF 41.8 46.5- - - - - - - - - - - - - - - - NMF NMF .63 NMF 2.23 2.51- - - - - - - - - - - - - - - - - - - - - - - - - - - -

23.2 29.5 30.6 34.8 46.9 52.8 68.9 86.2.2% 4.9% 10.5% 9.2% 13.7% 17.0% 18.7% 19.8%

.7 1.3 1.7 1.6 1.7 1.9 2.1 2.7d.6 .2 1.3 1.6 24.0 4.9 7.5 10.1- - 10.0% 1.2% .3% - - 34.1% 35.1% 37.6%

NMF .6% 4.3% 4.7% 51.3% 9.2% 10.8% 11.7%4.0 7.2 13.3 17.9 25.9 38.8 49.7 74.6.9 1.5 1.0 .5 - - - - - - - -

7.2 15.5 20.7 25.4 54.6 61.7 71.0 87.8NMF 1.7% 6.3% 6.6% 44.1% 7.9% 10.5% 11.5%NMF 1.2% 6.3% 6.4% 44.0% 7.9% 10.5% 11.5%NMF NMF 9.5% 7.0% 44.0% 7.9% 10.5% 11.5%

- - - - - - - - - - - - - - - -

2007 2008 2009 2010 © VALUE LINE PUB., INC. 12-144.63 4.95 5.85 6.45 Sales per sh A 9.35.74 .75 .95 1.05 ‘‘Cash Flow’’ per sh 1.50.56 .59 .75 .85 Earnings per sh B 1.25- - Nil Nil Nil Div’ds Decl’d per sh Nil

.17 .20 .20 .25 Cap’l Spending per sh .304.82 5.70 6.30 7.35 Book Value per sh 10.85

21.71 22.00 22.25 22.50 Common Shs Outst’g C 23.0046.4 Bold figures are

Value Lineestimates

Avg Ann’l P/E Ratio 25.02.46 Relative P/E Ratio 1.65

- - Avg Ann’l Div’d Yield Nil

100.6 109 130 145 Sales ($mill) A 21521.1% 21.5% 22.5% 23.0% Operating Margin 24.0%

3.5 4.0 4.5 4.5 Depreciation ($mill) 6.012.5 13.0 16.5 19.0 Net Profit ($mill) 28.0

36.9% 36.0% 36.0% 36.0% Income Tax Rate 36.0%12.4% 11.9% 12.7% 13.1% Net Profit Margin 13.0%

52.5 110 135 160 Working Cap’l ($mill) 275- - Nil Nil Nil Long-Term Debt ($mill) Nil

104.6 125 140 165 Shr. Equity ($mill) 25011.9% 12.0% 12.0% 11.5% Return on Total Cap’l 11.0%11.9% 12.0% 12.0% 11.5% Return on Shr. Equity 11.0%11.9% 12.0% 12.0% 11.5% Retained to Com Eq 11.0%

- - Nil Nil Nil All Div’ds to Net Prof Nil

Company’s Financial Strength B+Stock’s Price Stability 20Price Growth Persistence 85Earnings Predictability 35

(A) Fiscal years end March 31st of the follow-ing year.(B) Diluted earnings. Next earnings report dueearly May.

(C) In millions.

BUSINESS: Abaxis, Inc. develops, manufacturers, and marketsportable blood analysis systems for use in veterinary or humanpatient-care settings to provide clinicians with blood constituentmeasurements. The company markets its primary product, a bloodanalysis system, for veterinary use under the VetScan name and inthe human medical market under the Piccolo name. The veterinary

market accounts for roughly 70% of total sales. About 85% of salesare domestic. Has 265 employees. Off. & dir. own 6.6% of commonstock; Next Century Growth Investors, 8.1%; Brown Capital Mgmt.,7.4% (9/08 Proxy). Chairman, CEO & President: Clinton H. Sever-son. Incorporated: CA. Address: 3240 Whipple Road, Union City,CA 94587. Telephone: (510) 675-6500. Internet: www.abaxis.com.

Abaxis is facing a difficult market en-vironment. The portable blood analysissystems maker came up a bit short of ex-pectations in the third quarter (fiscal yearends March 31st) reporting an uninspiringshare-earnings advance of a penny overthe prior year. Although medical marketsales improved 19%, overall top-linegrowth was muted as demand forveterinary products fell due to the morediscretionary nature of this business. Wesuspect that the veterinary franchise willremain under pressure until there is evi-dence of an economic turnaround.The benefits of product introductionsshould help ease the pain a bit,though. Abaxis recently rolled out theVetScan VSpro Coagulation Analyzer andthe VetScan Canine Heartworm Rapidtest. We are especially intrigued by thelatter, which is likely to be the first in aseries of rapid, lateral-flow tests. Theheartworm market is estimated to bevalued at more than $70 million per year.Meanwhile, the company continues to gaintraction with its medical segment with theFDA, waiving CLIA status for two addi-tional point-of-care test panels. We think

the deeper portfolio will help offset some ofthe macroeconomic concerns and enableAbaxis to post 10%-15% share-net growthin the fourth quarter and a 25%-30%bottom-line advance in fiscal 2009.Wall Street seems to agree. In a rela-tively down market, Abaxis shares haveincreased over 20% in value since our No-vember report and are now favorablyranked for Timeliness. The stock does notstand out for 3- to 5-year appreciationpotential, however, as the run-up has dis-counted a noticeable portion of the share-price gains we envision out to 2012-2014.The company possesses the means toimprove its growth prospects, how-ever. Abaxis is debt-free, has a healthycash reserve, and generates good cashflow. We believe that management wouldbe wise to use the acquisition market toexpand its medical business, as this opera-tion offers far greater growth potentialthan the veterinary segment, but accountsfor only one-quarter of total sales. Thatsaid, long-term investors may want to waituntil plans are put in place before commit-ting funds.Andre J. Costanza February 27, 2009

LEGENDS22.0 x ″Cash Flow″ p sh. . . . Relative Price Strength

Options: YesShaded area: prior recession

Latest recession began 12/07

© 2009, Value Line Publishing, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.


RECENTPRICE

P/ERATIO

RELATIVEP/E RATIO

DIV’DYLD 170( )Trailing:

Median:VALUELINE

6448403224201612

86

Percentsharestraded

604020


ADVANCED MEDICAL NYSE-EYE 21.91 28.1 37.8NMF 2.40 Nil

TIMELINESS – Suspended 1/23/09

SAFETY 4 Lowered 11/28/08

TECHNICAL – Suspended 1/23/09BETA 1.15 (1.00 = Market)


Price Gain ReturnHigh 30 (+35%) 8%Low 17 (-20%) -6%Insider Decisions



High: 12.4 20.7 43.7 44.5 52.9 44.0 24.9 22.0Low: 7.7 11.3 20.0 32.0 33.9 23.4 2.9 6.4


STOCK INDEX1 yr. 4.6 -39.33 yr. -50.7 -36.65 yr. -4.0 -18.3


Total Debt $1545.5 mill. Due in 5 Yrs $18.0 mill.LT Debt $1541.0 mill. LT Interest $70.0 mill.

(70% of Capital)

Pension Assets-12/07 $10.1 bill. Oblig. $20.7 bill.

Preferred Stock NoneCommon Stock 61,281,853 shares

MARKET CAP: $1.3 billion (Mid Cap)CURRENT POSITION 2006 2007 9/30/08

($MILL.)Cash Assets 34.5 34.5 35.0Receivables 232.4 250.0 251.6Inventory (FIFO) 127.5 160.3 192.6Other 83.7 78.3 65.4Current Assets 478.1 523.1 544.6Accts Payable 53.9 88.4 64.2Debt Due - - 64.5 4.5Other 163.6 189.7 183.2Current Liab. 217.5 342.6 251.9

ANNUAL RATES Past Past Est’d ’05-’07of change (per sh) 10 Yrs. 5 Yrs. to ’12-’14Sales - - -3.0% 6.0%‘‘Cash Flow’’ - - - - NMFEarnings - - - - NMFDividends - - - - NilBook Value - - 40.0% 5.0%

Cal- Fullendar Year

QUARTERLY SALES ($ mill.)Mar.31 Jun.30 Sep.30 Dec.31

2006 238.2 257.0 258.6 243.7 997.52007 251.7 261.3 273.2 304.6 1090.82008 303.7 320.5 275.6 280.2 11802009 285 310 285 305 11852010 305 325 310 330 1270Cal- Full

endar YearEARNINGS PER SHARE A

Mar.31 Jun.30 Sep.30 Dec.312006 .04 d.04 .33 d.13 .122007 .22 d.80 d.35 d.03 d.962008 .22 .24 .15 .14 .752009 .20 .23 .21 .21 .852010 .24 .27 .25 .24 1.00Cal- Full



1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006- - - - - - - - - - - - - - - - - - 18.74 20.47 20.02 13.57 16.76- - - - - - - - - - - - - - - - - - 1.45 .88 d.81 d5.92 1.46- - - - - - - - - - - - - - - - - - .90 .35 d1.62 d8.28 .12- - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - .76 .67 .65 .50 .67- - - - - - - - - - - - - - - - - - 2.29 3.17 7.45 14.89 12.03- - - - - - - - - - - - - - - - - - 28.72 29.38 37.07 67.83 59.51- - - - - - - - - - - - - - - - - - 11.3 45.4 - - - - NMF- - - - - - - - - - - - - - - - - - .62 2.59 - - - - NMF- - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - 538.1 601.5 742.1 920.7 997.5- - - - - - 15.5% 12.5% 7.6% NMF 21.8%- - - - - - 15.7 15.5 23.6 51.6 70.6- - - - - - 25.9 10.4 d53.8 d453.2 16.5- - - - - - 41.9% 40.0% - - - - 65.6%- - - - - - 4.8% 1.7% NMF NMF 1.7%- - - - - - 166.3 137.2 182.9 218.9 260.6- - - - - - 277.6 233.6 550.6 500.0 851.1- - - - - - 65.7 93.2 276.3 1010.1 716.0- - - - - - 9.6% 6.9% NMF NMF 1.9%- - - - - - 39.4% 11.1% NMF NMF 2.3%- - - - - - 39.4% 11.1% NMF NMF 2.3%- - - - - - - - - - - - - - - -

2007 2008 2009 2010 © VALUE LINE PUB., INC. 12-1417.99 19.20 19.20 20.50 Sales per sh 24.00

.69 2.60 2.75 2.95 ‘‘Cash Flow’’ per sh 3.60d.96 .75 .85 1.00 Earnings per sh A 1.55

- - - - Nil Nil Div’ds Decl’d per sh Nil.75 .70 .75 .80 Cap’l Spending per sh .95

9.87 10.75 11.65 12.75 Book Value per sh B 17.2060.64 61.40 61.75 62.00 Common Shs Outst’g C 62.50NMF 23.2 Bold figures are

Value Lineestimates

Avg Ann’l P/E Ratio 14.5NMF 1.43 Relative P/E Ratio .95

- - - - Avg Ann’l Div’d Yield Nil

1090.8 1180 1185 1270 Sales ($mill) 150011.5% 22.0% 23.0% 23.0% Operating Margin 23.5%

99.2 114 116 118 Depreciation ($mill) 125d57.4 46.0 55.0 65.0 Net Profit ($mill) 100NMF 38.5% 39.0% 39.5% Income Tax Rate 40.0%NMF 3.9% 4.7% 5.1% Net Profit Margin 6.7%

180.5 210 290 350 Working Cap’l ($mill) 5251543.2 1450 1400 1325 Long-Term Debt ($mill) 1000598.7 660 720 790 Shr. Equity ($mill) 1075NMF 3.5% 4.0% 4.5% Return on Total Cap’l 6.5%NMF 7.0% 7.5% 8.0% Return on Shr. Equity 9.5%NMF 7.0% 7.5% 8.0% Retained to Com Eq 9.5%

- - - - Nil Nil All Div’ds to Net Prof Nil

Company’s Financial Strength C++Stock’s Price Stability 5Price Growth Persistence 45Earnings Predictability 5

(A) Diluted EPS. Excludes nonrecurring gain/(losses): ’04, ($2.03); ’06, $1.06; ’07, ($2.26).Next earnings report due early May. Quarterlyfigures may not add due to changes in share

count.(B) Includes intangibles. In ’07: $1.938 billionor $31.97 a share.(C) In millions.

BUSINESS: Advanced Medical Optics, Inc. provides a full range ofadvanced refractive technologies and support to help deliver op-timal vision and lifestyle experiences. It operates three businesssegments; the cataract/implant line, the laser vision correction busi-ness, and the contact lens care component. With products availablein more than 60 countries, it serves eye surgeons, optometrists, op-

ticians, ophthalmologists, and retailers, as well as clinics and am-bulatory surgical centers worldwide. Has roughly 4,100 employees.Officers & Directors own 19.2% of common stock; ValueAct CapitalMgmt., 14.5% (5/08). Chairman, CEO, & President: James V.Mazzo. Address: 1700 E. St. Andrew Place, Santa Ana, CA 92705.Telephone: (714) 247-8200. Internet: http://www.amo-inc.com.

It looks as though Advanced MedicalOptics may be nearing its final daysin our Survey. The eye care solutions pro-vider, agreed to be bought by medicaldevice maker Abbott Laboratories in Janu-ary for roughly $2.8 billion, including theassumption of more than $1.5 billion indebt. Specifically, EYE shareholders areslated to receive $22 in cash for each com-mon share owned. The deal looks to bemoving along smoothly, recently clearingU.S. antitrust regulations, but is stillawaiting European and shareholder ap-proval. If all goes well, we expect the dealto close by the end of the first quarter.The price tag appears to be attractive.The purchase price represents a 149% pre-mium over EYE’s closing price the day be-fore the deal was announced.Things are not as clear-cut as theymay initially seem, however. EYE stockhad been beaten up in the months leadingup to the announcement, as the economicmalaise raised concerns about futuredemand for corrective eye surgeries. Thatsaid, the current bid represents a 12% dis-count to the stock’s 52-week high price, atarget we envision the issue surpassing by

2012-2014, absent the takeover. Indeed,the pipeline recently got news that theFDA recently approved Advanced’s TecnisMultifocal Intraocular implantable lens.Those who had bought the stock a fewyears back may question the sale.Still, most will probably want to signoff on the agreement that is currentlyon the table. EYE stock has been ex-tremely volatile, making the recovery weare projecting dubious. Not only are theprospects of the corrective surgery busi-ness in question, but it is important tokeep the earlier mishap with the compa-ny’s solution line in mind. It is likely to bea long road back for this business, placingan even more vital need on the correctivesurgery franchise. We believe that mostwill want to lock in the gain, removing anyuncertainty that the stock brings with it.The issue is ranked 4 (Below Average) forSafety and has a low Price Stability score.Andre J. Costanza February 27, 2009

CASH POSITION 5-Year Av’g 9/30/08Current Assets to Current Liabilities: 194% 116%

Cash & Equiv’s to Current Liabilities: 21% 14%

Working Capital to Sales: 23% 25%


Options: YesShaded area: prior recession




RECENTPRICE

P/ERATIO

RELATIVEP/E RATIO


Median:VALUELINE

6448403224201612

86

Percentsharestraded

906030


AFFYMETRIX INC. NDQ-AFFX 3.13 NMF NMFNMF NMF Nil








High: 17.6 97.6 163.5 74.6 41.9 29.9 38.2 59.7 48.0 32.0 23.8 4.2Low: 8.1 11.8 42.3 14.0 13.8 16.3 23.2 33.9 17.5 20.0 2.0 2.9



CAPITAL STRUCTURE as of 9/30/08Total Debt $436.3 mill. Due in 5 Yrs NilLT Debt $436.3 mill. LT Interest $12.0 mill.Incl. $120 mill. of 3⁄4% 2033 notes, convertible at aprice of $31.01 a share, and $316.3 million of31⁄2% 2038 notes, conv. at $30.12.

(41% of Cap’l)Leases, Uncapitalized: Annual rentals $10.7 mill.No Defined Pension PlanPfd Stock None

Common Stock 70,202,630 shs.as of 10/31/08MARKET CAP: $225 million (Small Cap)CURRENT POSITION 2006 2007 9/30/08

($MILL.)Cash Assets 237.2 494.4 579.4Receivables 77.8 81.6 63.5Inventory (Avg Cst) 46.5 42.9 46.4Other 22.4 48.2 23.5Current Assets 383.9 667.1 712.8Accts Payable 62.9 61.5 15.0Debt Due - - - - - -Other 30.7 22.5 57.6Current Liab. 93.6 84.0 72.6

ANNUAL RATES Past Past Est’d ’05-’07of change (per sh) 10 Yrs. 5 Yrs. to ’12-’14Revenues 31.5% 5.5% .5%‘‘Cash Flow’’ - - - - 6.0%Earnings - - - - 5.5%Dividends - - - - NilBook Value 14.0% 28.0% -6.0%

Cal- Fullendar Year

QUARTERLY REVENUES ($ mill.)Mar.31 Jun. 30 Sep. 30 Dec. 31

2006 86.4 80.1 84.6 104.2 355.32007 80.4 88.3 95.0 107.6 371.32008 79.6 86.9 75.2 78.6 320.32009 75.0 77.0 78.0 80.0 3102010 80.0 82.0 83.0 85.0 330Cal- Full

endar YearEARNINGS PER SHAREA

Mar.31 Jun. 30 Sep. 30 Dec. 312006 .03 d.15 d.06 .15 d.032007 d.01 .05 .10 .20 .342008 d.02 d.04 d.18 d.23 d.472009 d.15 d.10 d.03 d.02 d.302010 d.05 d.02 .02 .05 NilCal- Full



1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006- - - - - - .27 .43 1.13 1.85 3.51 3.88 4.95 5.06 5.62 5.47 5.23- - - - - - d.24 d.44 d.45 d.36 d.76 d.32 .35 .86 1.19 1.28 .43- - - - - - d.41 d.50 d.56 d.51 d.98 d.61 d.03 .40 .74 .84 d.03- - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - .08 .35 .36 .30 .45 .58 .42 .21 .36 .60 1.17- - - - - - 2.50 2.00 1.45 2.51 2.57 2.22 2.31 2.78 4.05 7.73 8.14- - - - - - 45.07 45.57 46.03 52.37 57.14 58.01 58.50 59.45 61.59 67.22 67.92- - - - - - - - - - - - - - - - - - - - 57.7 41.7 55.0 - -- - - - - - - - - - - - - - - - - - - - 3.29 2.20 2.93 - -- - - - - - - - - - - - - - - - - - - - - - - - - - - -

96.9 200.8 224.9 289.9 300.8 346.0 367.6 355.3NMF NMF NMF 12.7% 18.8% 24.7% 25.6% 7.3%

6.5 10.7 16.3 22.0 26.7 25.7 28.2 31.1d23.1 d54.0 d34.8 d1.6 24.2 47.6 57.5 d2.1

- - - - - - - - 10.2% 6.5% 8.1% - -NMF NMF NMF NMF 8.0% 13.8% 15.6% NMF

228.7 418.3 372.7 371.7 192.8 226.3 345.6 290.3155.0 380.1 375.0 377.2 120.0 120.0 120.0 120.0131.3 147.1 129.0 134.9 165.1 249.2 519.8 553.0NMF NMF NMF 1.6% 11.5% 14.4% 9.1% NMFNMF NMF NMF NMF 14.7% 19.1% 11.1% NMFNMF NMF NMF NMF 14.7% 19.1% 11.1% NMFNMF - - - - - - - - - - - - - -

2007 2008 2009 2010 © VALUE LINE PUB., INC. 12-145.36 4.55 4.35 4.60 Revenues per sh 5.55.82 .15 .35 .65 ‘‘Cash Flow’’ per sh 1.25.34 d.47 d.30 Nil Earnings per sh A .55- - - - Nil Nil Div’ds Decl’d per sh Nil


69.22 70.50 71.00 71.75 Common Shs Outst’g B 74.0075.1 - - Bold figures are

Value Lineestimates

Avg Ann’l P/E Ratio 21.03.99 - - Relative P/E Ratio 1.40


371.3 320.3 310 330 Revenues ($mill) 41014.4% 3.5% 7.5% 13.5% Operating Margin 25.0%

32.1 43.0 46.0 48.0 Depreciation ($mill) 52.024.5 d32.2 d21.0 Nil Net Profit ($mill) 40.0

27.0% - - NMF NMF Income Tax Rate 25.0%6.6% NMF NMF NMF Net Profit Margin 9.8%583.1 420.8 425 455 Working Cap’l ($mill) 510436.3 316.3 315 315 Long-Term Debt ($mill) 315598.4 303.7 285 290 Shr. Equity ($mill) 3902.5% NMF NMF NMF Return on Total Cap’l 5.5%4.1% NMF NMF NMF Return on Shr. Equity 10.5%4.1% NMF NMF NMF Retained to Com Eq 10.5%


Company’s Financial Strength BStock’s Price Stability 20Price Growth Persistence 10Earnings Predictability 20

(A) Fully diluted earnings. Excludes nonrecur-ring losses: ’03, $0.17; 05, 24¢; ’06, 17¢; ’07,17¢; ’08, $4.02. Next earnings report due lateApril.

(B) In millions, adjusted for a stock split.

BUSINESS: Affymetrix Inc. is a leading genomics company thatmanufactures tools that enable the large-scale analysis of the hu-man genome. The company’s GeneChip technology is intended tosimplify, accelerate, and reduce the cost of analyzing geneticvariability (both sequence and expression) and lead to new op-portunities in disease mgmt. Products are used by pharm. and bio-

tech. companies, as well as academic research centers and clinicalreference labs. ’07 R&D; $72.7 mill. Has 1,140 employees. Off./dir.own 2.5% of com; FMR Corp., 14.6%; T. Rowe Price, 10.4%;PrimeCap Mgmt., 8.2% (4/08 Proxy). Chairman & CEO: Stephen P.Fodor, Ph.D. Pres.: Kevin M. King. Inc.: Del. Addr.: 3380 CentralExpressway, Santa Clara, CA 95051. Tel.: 408-731-5000.

The recently concluded year wasclearly a very difficult one for Af-fymetrix, as reflected by the untimelystock’s price chart above. Market-sharelosses hurt revenues, and this problemwas exacerbated by a progressively deeperretrenchment by pharma and academicend users. In all, year-over-year top-linecomparisons deteriorated dramatically in2008’s second half, tumbling 20.8% and27.0% in the third and fourth quarters,respectively; the decline was a relativelymodest 1.3% in the initial six months. Notsurprisingly, the operating margin alsocollapsed, dragging the per-share loss forthe full year to $0.47, well below the $0.34earned in the previous year. That said, wewould note that the company reported afull-year loss of $4.49 a share, which in-cludes substantial one-time charges forgoodwill impairment and restructuring.The genomics concern’s bottom linewill probably stay in negative terri-tory this year. The business trends evi-dent in 2008 were clearly not encouraging,and neither is the prevailing economic en-vironment. Affymetrix needs quarterlyrevenues of at least $80 million and gross

margins that exceed 60% to merely breakeven. We don’t expect either threshold tobe achieved in 2009, until possibly the lastquarter. Indeed, management’s revenueguidance for the March quarter is only$72–$75 million; it declined to provideguidance for the full year, which we thinkis prudent, considering the extraordinarilylow visibility across the board. We areleaving our estimate for the year at a lossof $0.30 per share.A reasonably healthy balance sheetsuggests that the company has stay-ing power . . . Affymetrix paid down debtby $120 million in 2008. It also executedthree small acquisitions, which provide theopportunity to both generate sales syner-gies and penetrate new markets. Still,cash totaled almost $400 million at theend of the year. This should give manage-ment the time to improve its product offer-ings; it recently launched the GeneTitanSystem, an integrated platform that auto-mates customer workflow from targetpreparation to array processing to results.. . . and AFFX stock offers patient in-vestors wide price recovery potential.George Rho February 27, 2009


2-for-1 split 8/00Options: YesShaded area: prior recession




RECENTPRICE

P/ERATIO

RELATIVEP/E RATIO


Median:VALUELINE

320

2001601201008060

40

18Percentsharestraded

1284


ALCON INC. NYSE-ACL 87.09 14.4 14.5NMF 1.23 2.9%

TIMELINESS 3 Lowered 10/31/08


TECHNICAL 4 Lowered 1/30/09BETA .85 (1.00 = Market)





High: 43.3 61.3 87.5 148.7 146.3 154.9 178.6 93.9Low: 26.8 34.7 58.5 76.7 90.9 109.4 66.6 78.2


STOCK INDEX1 yr. -38.7 -39.33 yr. -30.0 -36.65 yr. 42.3 -18.3

Alcon, Inc. was founded in 1945 and wasoriginally incorporated in Switzerland in1971 as Societe Fromagere Nestle. Thecompany officially changed its name to Al-con, Inc. in 2001. On March 20, 2002, thecompany completed its initial public offeringby issuing 69,750,000 shares of commonstock at $33.00 per share. The deal was un-derwritten by Credit Suisse First Boston andMerrill Lynch.CAPITAL STRUCTURE as of 12/31/08Total Debt $1120.1 mill.Due in 5 Yrs $1120.1 mill.

LT Debt $60.6 mill. LT Interest $3.5 mill.(2% of Cap’l)

Leases, Uncapitalized: Annual rentals $54.9 mill.Pension Assets $54.3 mill. Oblig. $411.3 mill.

Pfd Stock None

Common Stock 299,393,129 shs.

MARKET CAP: $26.1 billion (Large Cap)CURRENT POSITION 2006 2007 12/31/08

($MILL.)Cash Assets 1489.2 2134.3 2449.4Receivables 912.8 1089.2 1168.0Inventory (Avg Cst) 473.8 548.5 537.8Other 586.3 1052.8 1064.2Current Assets 3462.1 4824.8 5219.4Accts Payable 168.9 208.7 198.5Debt Due 932.3 1752.4 1059.5Other 899.9 901.1 923.3Current Liab. 2001.1 2862.2 2190.3

ANNUAL RATES Past Past Est’d ’05-’07of change (per sh) 10 Yrs. 5 Yrs. to ’12-’14Sales - - 11.5% 9.5%‘‘Cash Flow’’ - - 23.5% 11.0%Earnings - - 28.0% 12.5%Dividends - - - - NMFBook Value - - 20.0% 15.5%

Cal- Fullendar Year

QUARTERLY SALES ($ mill.) A

Mar.31 Jun. 30 Sep. 30 Dec. 312006 1157 1310 1204 1225 4896.62007 1322 1471 1336 1470 5599.62008 1536 1735 1525 1498 6293.72009 1540 1740 1530 1510 63202010 1655 1865 1650 1630 6800Cal- Full


Mar.31 Jun. 30 Sep. 30 Dec. 312006 .95 1.18 1.06 1.16 4.352007 1.22 1.48 1.39 1.31 5.402008 1.43 1.88 1.28 1.41 6.002009 1.47 1.78 1.40 1.50 6.152010 1.58 1.95 1.55 1.67 6.75Cal- Full

endar YearQUARTERLY DIVIDENDS PAID B

Mar.31 Jun.30 Sep.30 Dec.312005 - - .990 - - - - .992006 - - 1.380 - - - - 1.382007 - - 2.060 - - - - 2.062008 - - 2.450 - - - - 2.452009

1999 2000 2001 2002 2003 2004 2005 2006- - - - 9.16 9.74 11.04 12.80 14.25 16.26- - - - 1.70 2.05 2.49 3.48 4.41 5.64- - - - 1.05 1.53 1.90 2.80 3.65 4.35- - - - - - - - .23 .36 .99 1.38- - - - .42 .39 .51 .48 .53 .74- - - - 4.63 3.15 5.16 7.16 8.34 9.67- - - - 300.00 309.03 308.52 305.65 306.49 301.18- - - - - - 23.7 25.0 26.0 30.0 25.5- - - - - - 1.29 1.43 1.37 1.60 1.38- - - - - - - - .5% .5% .9% 1.2%

- - - - 2747.7 3009.1 3406.9 3913.6 4368.5 4896.6- - - - 28.5% 28.9% 30.8% 33.9% 37.6% 39.4%- - - - 195.3 166.5 177.8 193.2 210.6 357.3- - - - 315.6 466.9 590.1 871.8 1139.9 1341.9- - - - 38.6% 31.1% 30.6% 22.6% 21.3% 17.0%- - - - 11.5% 15.5% 17.3% 22.3% 26.1% 27.4%- - - - 658.5 d361.4 237.2 766.7 989.5 1461.0- - - - 697.4 80.8 75.0 71.9 56.0 49.0- - - - 1389.6 974.3 1591.5 2187.9 2556.1 2913.6- - - - 16.4% 44.4% 35.5% 38.6% 44.3% 46.0%- - - - 22.7% 47.9% 37.1% 39.8% 44.6% 46.1%- - - - 22.1% NMF 30.3% 32.1% 32.8% 31.8%- - - - 3% NMF 18% 19% 26% 31%

2007 2008 2009 2010 © VALUE LINE PUB., INC. 12-1418.81 21.10 21.30 22.95 Sales per sh 28.306.20 6.75 6.95 7.65 ‘‘Cash Flow’’ per sh 10.055.40 6.00 6.15 6.75 Earnings per sh A 9.002.06 2.45 2.80 3.20 Div’ds Decl’d per sh B 4.25.76 1.00 .95 1.00 Cap’l Spending per sh 1.20

11.34 15.75 17.85 19.80 Book Value per sh C 27.05297.66 298.00 297.00 296.00 Common Shs Outst’g D 295.00

25.2 23.5 Bold figures areValue Lineestimates

Avg Ann’l P/E Ratio 26.01.34 1.49 Relative P/E Ratio 1.75

1.5% 1.7% Avg Ann’l Div’d Yield 1.0%

5599.6 6293.7 6320 6800 Sales ($mill) 835038.2% 38.4% 37.0% 37.5% Operating Margin 39.5%210.4 205 225 250 Depreciation ($mill) 300

1633.6 1810.8 1840 2010 Net Profit ($mill) 267017.3% 13.2% 12.0% 12.0% Income Tax Rate 12.0%29.2% 28.8% 29.1% 29.6% Net Profit Margin 32.0%1962.6 3029.1 3550 4060 Working Cap’l ($mill) 4920

52.2 60.6 60.0 60.0 Long-Term Debt ($mill) 60.03374.7 4691 5300 5870 Shr. Equity ($mill) 798047.7% 38.0% 34.5% 34.0% Return on Total Cap’l 33.0%48.4% 38.5% 34.5% 34.5% Return on Shr. Equity 33.5%30.2% 22.5% 19.0% 18.0% Retained to Com Eq 18.0%

38% 41% 45% 47% All Div’ds to Net Prof 47%

Company’s Financial Strength AStock’s Price Stability 65Price Growth Persistence 90Earnings Predictability 95

(A) Diluted earnings per share. Excludes netnonrecurring gains/(losses): ’03, 2¢; ’04, 18¢;’05, (67¢); ’06, 2¢; ’07, (14¢); ’08, 79¢.Quarterly Sales and EPS may not sum due to

rounding. Next earnings report due lateApril.(B) Dividends historically paid in May.(C) Includes intangibles. In 2007: $715.6 mil-lion, $2.40 per share.

(D) In millions.

BUSINESS: Alcon Inc. is a global medical specialty company thatdevelops, manufactures, and markets pharmaceuticals, surgicalequipment and devices, and consumer eye care products to treatdiseases and disorders of the eye. The company sells products inover 180 countries. Has two primary business segments: AlconU.S. (48% of 2007 sales) and Alcon International (52%). Has three

products segments: pharmaceutical (41% of 2007 sales), surgical(45%), and consumer eye (14%). As of 12/31/07, company hadabout 14,500 empls. Nestle owns 52.2% of common stock; Novartisowns 24.8% (as of 7/3/08). Chairman, CEO, Pres.: Cary Rayment.Inc.: Switzerland. Addr.: Bosch 69, P.O. Box 62, Hunenberg, Swit-zerland. Tel. 800-400-8599. Internet: www.alconlabs.com.

Alcon finished 2008 on a relativelysolid note. Despite the difficult environ-ment, the company posted 2% sales growthin the final quarter, or 7% excluding cur-rency effects. Share net improved 8% to$1.41, partially benefiting from a lowerquarterly tax rate. The top- and bottom-line performances were above our pre-viously reduced expectations, anddemonstrate some resiliency from ACL’sdiverse product lines. The recent trendcontinued to play out, with strong interna-tional performance and weak U.S. results.However, currency effects led to a large re-duction to reported international resultsfor the quarter. International sales im-proved 1% which, excluding the impact ofcurrency was a strong 10.4% gain. Yeteven the impressive underlying interna-tional performance was a moderation fromrecent growth rates, as the global reces-sion has begun to have a larger impact onoverseas results. Meanwhile, U.S. salesadvanced 2.8% in the recent period,despite a 1% decline at the weak pharma-ceutical segment.Management has lowered its top- andbottom-line guidance for 2009. It now

expects sales growth (excluding currencyand acquisitions) to be in the mid-singledigits, and share net to fall between $6.05and $6.25. The projection assumes weakerperformance in the first half of the year,followed by a rebound in the final twoquarters. However, the assumption of im-proved second half performance may besomewhat optimistic. Therefore, we’re tak-ing a slightly more conservative position inour outlook for 2009.We anticipate additional moderationfrom international results, though itremains to be seen where perform-ance will bottom out. Aside fromanticipated currency impact, we believethat recent international growth levels arenot sustainable in the current environ-ment. Notwithstanding strong demand forACL’s eye care products in internationalmarkets, the deteriorating economic envi-ronment should further challenge results.These shares offer attractive long-term potential. ACL has a dominantglobal position in numerous eye care seg-ments, and earnings growth should pickup over the pull to 2012-2014.Joel Schwed February 27, 2009

LEGENDS. . . . Relative Price StrengthOptions: YesShaded area: prior recession




RECENTPRICE

P/ERATIO

RELATIVEP/E RATIO


Median:VALUELINE

403224

16121086

4

Percentsharestraded

453015


ALIGN TECHNOLOGY NDQ-ALGN 8.42 NMF 30.1NMF NMF Nil








High: 19.4 6.3 19.0 22.8 10.9 15.3 29.7 17.2 9.7Low: 2.1 1.3 2.5 8.9 5.6 5.6 13.1 4.9 7.5



Align Technology first received FDAclearance to market the Invisalign System in1998. In July of 1999, the company beganselling its System commercially. Align Tech-nology went public in 2001, when it issued10 million shares at $13 each. DeutscheBank Alex. Brown served as lead un-derwriter.


Total Debt None

Leases, Uncapitalized: Annual rentals $3.3 mill.

No Defined Benefit Pension Plan

Pfd Stock None

Common Stock 67,040,827 shs.as of 10/31/08

MARKET CAP: $575 million (Small Cap)CURRENT POSITION 2006 2007 12/31/08

($MILL.)Cash Assets 64.0 127.9 110.1Receivables 33.6 44.9 52.3Inventory (FIFO) 3.1 2.9 1.9Other 7.4 8.8 13.6Current Assets 108.1 184.5 177.9Accts Payable 5.0 9.2 5.6Debt Due 11.5 - - - -Other 51.3 52.3 55.0Current Liab. 67.8 61.5 60.6

ANNUAL RATES Past Past Est’d ’05-’07of change (per sh) 10 Yrs. 5 Yrs. to ’12-’14Sales - - 25.5% 10.5%‘‘Cash Flow’’ - - - - NMFEarnings - - - - NMFDividends - - - - NilBook Value - - 0.5% 13.5%

Cal- Fullendar Year

QUARTERLY SALES ($ mill.)Mar.31 Jun.30 Sep.30 Dec.31

2006 49.0 53.2 49.0 55.2 206.42007 63.8 76.5 71.5 72.5 284.32008 74.8 79.9 75.2 74.1 304.02009 66.0 69.0 67.0 68.0 2702010 73.0 77.0 74.0 76.0 300Cal- Full


Mar.31 Jun.30 Sep.30 Dec.312006 d.08 d.04 d.16 d.12 d.402007 .10 .19 .13 .08 .502008 .07 .06 .11 .07 .312009 d.01 .00 .02 .02 .032010 .04 .06 .08 .07 .25Cal- Full



1999 2000C 2001 2002 2003 2004 2005 2006- - - - .97 1.31 2.09 2.84 3.34 3.18- - - - d1.41 d.95 d.19 .30 .19 d.24- - - - d2.57 d1.42 d.35 .14 .02 d.40- - - - - - - - - - - - - - - -- - - - .40 .14 .13 .15 .22 .15- - - - 2.08 1.22 1.07 1.41 1.51 1.29- - - - 47.77 57.70 58.75 60.88 62.08 64.86- - - - - - - - - - NMF NMF - -- - - - - - - - - - NMF NMF - -- - - - - - - - - - - - - - - -

- - 6.7 46.4 75.4 122.7 172.8 207.1 206.4- - NMF NMF NMF NMF 11.2% 6.2% NMF- - 16.3 30.0 13.1 9.1 9.6 10.5 10.3- - d88.7 d97.5 d68.1 d20.1 8.8 1.4 d25.6- - - - - - - - - - 10.2% 48.2% - -- - NMF NMF NMF NMF 5.1% .7% NMF- - 18.3 63.8 47.4 39.7 61.8 63.0 40.3- - 1.5 1.0 3.8 1.8 - - - - - -- - 44.2 99.4 70.6 63.0 85.7 93.4 83.6- - NMF NMF NMF NMF 10.4% 1.5% NMF- - NMF NMF NMF NMF 10.2% 1.5% NMF- - - - NMF NMF NMF 10.2% 1.5% NMF- - - - - - - - - - - - - - - -

2007 2008 2009 2010 © VALUE LINE PUB., INC. 12-144.14 4.55 4.15 4.70 Sales per sh 7.10.72 .55 .25 .50 ‘‘Cash Flow’’ per sh .95.50 .31 .03 .25 Earnings per sh A .65- - - - Nil Nil Div’ds Decl’d per sh Nil


68.64 67.00 65.00 63.00 Common Shs Outst’g B 60.0041.5 35.3 Bold figures are

Value Lineestimates



284.3 304.0 270 300 Sales ($mill) 42516.6% 11.8% 6.5% 11.0% Operating Margin 16.5%


3.3% 5.0% 6.0% 10.0% Income Tax Rate 32.0%12.6% 7.1% .8% 5.4% Net Profit Margin 9.4%123.0 130 125 135 Working Cap’l ($mill) 215

- - - - Nil Nil Long-Term Debt ($mill) Nil161.2 150 185 225 Shr. Equity ($mill) 250

22.2% 14.0% 1.0% 7.0% Return on Total Cap’l 16.0%22.2% 14.0% 1.0% 7.0% Return on Shr. Equity 16.0%22.2% 14.0% 1.0% 7.0% Retained to Com Eq 16.0%



(A) Diluted earnings. Next earnings report dueearly April.

(B) In millions. (C) 2000 data is pro forma.

BUSINESS: Align Technology, Inc., engages in the design, manu-facture, and marketing of Invisalign. Invisalign, has two primarycomponents, ClinCheck and Aligners. ClinCheck is an Internet-based application that enables orthodontists to simulate treatment.Aligners are thin, invisible, and removable dental appliances thatare used to straighten teeth. Has 1,253 employees. Officers and

directors own 6.7% of common stock; Gordon Gund, 10.9%; Kornit-zer Capital Management, 6.3%; OrbiMed Advisors, 6.0; HealthCorManagement, 5.8%; FMR, 5.6% (4/08 proxy). Chairman: C.Raymond Larkin, Jr. Pres. and CEO: Thomas M. Prescott. In-corporated: Del. Address: 881 Martin Ave., Santa Clara, CA 95050.Tel.: 408-470-1000. Internet: www.aligntech.com.

Align Technology is facing an in-creasingly difficult environment.Despite better-than-anticipated earningsin the recent fourth quarter, overall per-formance continues to deteriorate.Domestic sales and new case starts bothdeclined 2% as compared to the prior year.Although international segments liftedoverall results, there continues to be amoderation in international growth. Andwe anticipate a further slowdown in suchgrowth, as the global recession deepens.Despite anticipated cost savings fromrestructuring initiatives, we’velowered our 2009 earnings outlook toslightly above breakeven. We had origi-nally looked for a 6%-7% sales decline in2009, yet expected cost reduction to offsetthe top-line decline. However, manage-ment has made it clear that it intends toinvest more in certain areas to drive long-term growth. The additional expendituresshould negate the cost savings, and fur-ther exacerbate the additional loss of reve-nue. All told, we look for a 11% decline inrevenue, and share net of $0.03.The company is focused on increasingawareness of its relatively new In-

visalign Teen line, and expandingoverseas. Invisalign Teen has gotten offto a solid start, but faces challenges ingaining traction in this difficult consumeratmosphere. There is some natural resis-tance on the part of dentists to take on thenew product line in this environment.ALGN is trying to directly engage teensthrough various media channels to in-crease product awareness. Management iswilling to sacrifice near-term profitabilityto invest in this high-potential market.It remains to be seen how much of achallenge a prolonged slide in con-sumer spending will present. Whilethere are numerous benefits to the compa-ny’s products, they are expensive, and rep-resent an incremental discretionary ex-penditure for consumers. We are anticipat-ing a sharp drop in revenue in 2009, butour expectation may prove optimistic.These neutrally ranked shares shouldremain under pressure in the yearahead. However, ALGN has a tremendousmarket opportunity with no visible compe-titive threat, and offers about average ap-preciation potential out to 2012-2014.Joel Schwed February 27, 2009

LEGENDS. . . . Relative Price StrengthOptions: YesShaded area: prior recession




RECENTPRICE

P/ERATIO

RELATIVEP/E RATIO


Median:VALUELINE

8060504030252015

107.5

Percentsharestraded

755025


AMER. MEDICAL SYS. NDQ-AMMD 10.72 16.8 19.5NMF 1.24 Nil

TIMELINESS 2 Lowered 12/12/08


TECHNICAL 3 Raised 2/27/09BETA .85 (1.00 = Market)





High: 10.7 11.5 13.0 12.0 21.8 24.4 23.5 22.2 18.4 12.0Low: 5.4 3.6 6.4 6.5 10.6 15.0 14.9 11.9 8.0 8.7



American Medical Systems Holdings, Inc.was incorporated in Delaware in 1972. It be-gan trading on the NASDAQ market August15, 2000. 6,250,000 shares were offered at$5.50 by lead underwriter US Bancorp PiperJaffray. A secondary offering followed inJune 2001 with 7,000,000 shares priced at$8.20 again with US Bancorp Piper Jaffrayas lead underwriters.

CAPITAL STRUCTURE as of 9/27/08Total Debt $591.6 mill. Due in 5 Yrs. $217.8 mill.LT Debt $591.6 mill.Includes $373.8 mill. 3.25% sub notes (’36) cv. into51.5318 shs. at $19.406.

(61% of Cap’l)Leases, Uncapitalized Annual rentals $2.6 mill.Pension Obligation $3.2 million

Preferred Stock None

Common Stock 73,290,774 sharesas of 11/3/08MARKET CAP: $775 million (Small Cap)CURRENT POSITION 2006 2007 9/27/08

($MILL.)Cash Assets 29.5 35.2 35.8Receivables 91.3 106.5 92.4Inventory (FIFO) 38.0 60.7 44.9Other 74.8 23.0 14.0Current Assets 233.6 225.4 187.1Accts Payable 15.4 13.4 8.6Debt Due - - - - - -Other 87.1 68.7 41.5Current Liab. 102.5 82.1 50.1

ANNUAL RATES Past Past Est’d ’05-’07of change (per sh) 10 Yrs. 5 Yrs. to ’12-’14Revenues - - 21.0% 11.0%‘‘Cash Flow’’ - - 1.0% NMFEarnings - - -12.0% NMFDividends - - - - NilBook Value - - 10.5% 14.5%FiscalYear

Begins

FullFiscalYear

QUARTERLY REVENUES ($ mill.)Mar.Per Jun.Per Sep.Per Dec.Per

2006 73.6 78.8 90.5 115.4 358.32007 108.4 116.5 109.0 130.0 463.92008 120.4 129.7 117.4 134.1 501.62009 120.0 128.0 125.0 132.0 5052010 131.0 134.0 132.0 138.0 535FiscalYear

Begins

FullFiscalYear

EARNINGS PER SHARE A

Mar.Per Jun.Per Sep.Per Dec.Per2006 .16 d.12 d.82 .15 d.632007 .06 .10 .09 .08 .332008 .11 .19 .08 .20 .582009 .11 .17 .16 .21 .652010 .13 .18 .17 .22 .70Cal- Full



1999 2000 2001 2002 2003 2004 2005 2006- - 1.81 1.85 2.18 2.54 3.09 3.78 5.04- - .22 .31 .50 .60 .52 .75 d.38- - .01 .10 .37 .43 .33 .55 d.63- - - - - - - - - - - - - - - -- - .03 .04 .03 .10 .05 .07 .31- - 1.97 2.72 3.14 3.63 3.69 4.36 3.96- - 55.53 63.92 65.00 66.27 67.48 69.53 71.06- - NMF 77.2 21.9 47.5 35.3 - -- - NMF 3.96 1.25 2.51 1.88 - -- - - - - - - - - - - - - - - -

- - 100.3 117.9 141.6 168.3 208.8 262.6 358.3- - 18.5% 25.2% 32.3% 31.1% 32.2% 29.6% 2.4%- - 12.1 13.2 7.7 10.6 12.8 13.0 17.1- - .1 6.5 24.9 29.1 22.6 39.3 d43.9- - NMF 47.3% 38.7% 34.1% 60.0% 40.7% - -- - .1% 5.5% 17.6% 17.3% 10.8% 15.0% NMF- - 18.7 50.9 97.3 89.6 79.5 69.5 131.1- - 38.5 24.0 18.0 9.2 - - - - 713.5- - 109.5 174.1 204.3 240.3 249.2 302.9 281.2- - 2.4% 4.3% 11.8% 12.0% 9.1% 13.0% NMF- - .0% 3.8% 12.2% 12.1% 9.1% 13.0% NMF- - .0% 3.8% 12.2% 12.1% 9.1% 13.0% NMF- - - - - - - - - - - - - - - -

2007 2008 2009 2010 © VALUE LINE PUB., INC. 12-146.42 6.80 6.85 7.40 Revenues per sh 8.90.70 1.00 1.05 1.20 ‘‘Cash Flow’’ per sh 1.45.33 .58 .65 .70 Earnings per sh A 1.00- - - - Nil Nil Div’ds Decl’d per sh Nil

.20 .10 .15 .15 Cap’l Spending per sh .154.54 5.05 5.65 6.30 Book Value per sh C 8.90

72.26 73.50 74.00 74.50 Common Shs Outst’g B 76.0054.3 24.4 Bold figures are

Value Lineestimates



463.9 501.6 505 535 Revenues ($mill) 67522.3% 25.0% 26.0% 26.0% Operating Margin 26.0%


47.4% 38.3% 39.0% 39.0% Income Tax Rate 39.0%5.1% 8.5% 9.5% 9.8% Net Profit Margin 11.3%143.3 100 85.0 120 Working Cap’l ($mill) 275666.2 560 475 435 Long-Term Debt ($mill) 315328.2 370 420 470 Shr. Equity ($mill) 6754.3% 6.0% 6.5% 7.0% Return on Total Cap’l 8.5%7.2% 11.5% 11.5% 11.5% Return on Shr. Equity 11.5%7.2% 11.5% 11.5% 11.5% Retained to Com Eq 11.5%



(A) Diluted earnings. Next earnings report duelate April.(B) In millions.(C) Incl. intangibles. At 1/3/09: $799.7 million,

$10.88/share.

BUSINESS: American Medical Systems Holdings, Inc. providesmedical solutions to physicians treating men’s and women’s pelvichealth conditions. It manufactures and markets surgical products tourologists, gynecologists, and urogynecologists for erectile restora-tion, benign prostatic hyperplasia, male urethral stricture, urinaryand fecal incontinence, and pelvic organ prolapse. 2007 foreign

sales, 28%. 2007 depr. rate: 29.1%. Has 1239 employees. Of-ficer/directors own 5.8% of stock; Neuberger Berman, 14.3%,Franklin Resources, Inc., 10.4%, FMR LLC, 9.6%. (4/08 Proxy)President & Chief Executive Officer: Anthony Bihl III. Inc.: Dela-ware. Address: 10700 Bren Road West, Minnetonka, MN 55343.Tel.: (952) 930-6000. Internet: www.americanmedicalsystems.com.

American Medical Systems finished2008 with a soft landing. Share earn-ings performance in the December interimwas one third weaker than our estimate of$0.30 likely owing to the recession. Pelvichealth procedures while not altogetherelective, are somewhat deferrable, and anincrease in postponements has been noted.Further, capital spending by hospitals andhealth care professionals has been clipped,with economic concerns at the forefront ofmany budgetary decisions. We look for astagnant top-line in 2009 and have paredour bottom line by $0.15 to just a $0.07improvement over the 2008 tally.A healthy pipeline ought to enhanceits long-term performance. The com-pany has launched several new productssince the last half of 2008 that are garner-ing interest, such as Spectra, a penileprosthesis and Elevate, a treatment forvaginal prolapse. In addition to these rol-louts, product line extensions are in theworks as well, such as additional applica-tions of its Laser Therapy. Not all projectshave gone smoothly. AMMD stopped devel-opment efforts on Ovion, its permanentcontraception project. The company has

maintained its 10% budget for R & D,similar to previous years, despite a blearyeconomic picture.Extension of its geographic footprintprovides strong growth potential. For-eign sales now encompass 30% of total rev-enues and the company is gearing to ex-pand that share with a push into new loca-tions. Product acceptance, usage, andgrowth rates are increasing faster abroadthan in the more mature domestic market.Its GreenLight Therapy has been ap-proved for distribution in Brazil andChina, both densely populated. Thoughthe global economy has sputtered as well,the diversification ought to provide a buff-er to weakness in AMMD’s home market.Short-term investors may want toconsider this stock. AMMD shares haveslipped a notch in Timeliness to (2), butare still a good choice in the coming year.We foresee a longer recovery due to slowertop- and bottom-line growth given therecession. This curtails our 3- to 5-yearoutlook. Consequently, these shares nowoffer below average price performance to2012-2014.Mary Beth Wiedenkeller February 27, 2009


2-for-1 split 3/05Options: YesShaded area: prior recession




RECENTPRICE

P/ERATIO

RELATIVEP/E RATIO


Median:VALUELINE

February 27, 2009 S U P P L E M E N TA RY R E P O RT S 236

© 2009, Value Line Publishing, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber's own, non-commercial, internal use. No part of it maybe reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.


AEGON (AEG; 4.01)Latest Report page 1200 1-16-09

Aegon, a life insurance and financial services company,has reported a fourth-quarter loss of 1.2 billion euro (orabout $1.13 a share), versus our $0.23 profit forecast andthe $0.45 earned a year earlier. The shortfall was prima-rily a result of difficult market conditions, which in-creased impairments and led the company to transfermore funds into its capital reserves. Aegon offered noearnings guidance for 2009. Likewise, our estimates arecurrently under review. These shares are ranked tounderperform the broader market in the coming six to12 months.

W.T.

AUTOLIV, INC. (ALV; 18.46)Latest Report page 781 12-26-08

Autoliv, a global manufacturer of automotive safetysystems, has suspended its dividend as a means of cashpreservation, given the current turmoil in the auto in-dustry. The company had previously cut its dividend inhalf, but felt the need for additional cash-enhancingmeasures. Management has also suspended share repur-

chases and secured $250 million in new financing. Thisissue is a Below-Average (Timeliness: 4) selection for rela-tive year-ahead price performance.

J.S.

BJ’S RESTAURANTS (BJRI; 11.68)Latest Report page 286 12-5-08

BJ’s Restaurants, an operator of casual dining restau-rants, has reported stronger-than-anticipated fourth-quarter results. With the exclusion of nonrecurring items,the company earned $0.13 a share. While this representsa modest decline from the year-earlier tally, it should benoted that the operating environment deteriorated sig-nificantly in 2008. A slight decline in comparable saleswas mitigated by several recently implemented initia-tives, including introductions of new products and ser-vices. In light of the dour economic outlook for the yearahead, management intends to implement additionalstrategies similar in nature. BJ’s did not provide 2009earnings guidance, but mentioned that the current yearwould be a difficult one. Nevertheless, we are maintain-ing our $0.50 estimate, for now. This stock is neutrallyranked for Timeliness.

D.S.




CBS CORP. ‘B’ (CBS; 5.25)Latest Report page 2321 2-13-09

CBS Corp., the owner and operator of television net-works, radio stations and outdoor advertising displays,has slashed its quarterly dividend payout from $0.27 ashare to $0.05. Management cited a desire to maintainfinancial flexibility, amidst an economic recession andcredit market turmoil, as the reason for the reduction.More specifically, the company has sizable debt obliga-tions beginning in 2010 and may elect to repurchase stockin the coming quarters. Meantime, it reported Decem-ber-quarter share net of $0.31 adjusted for nonrecurringitems, a penny above our forecast but $0.23 lower yearover year. We continue to look for earnings of $1.05 ashare in 2009. Because of the dividend cut, however, wehave lowered the company’s Financial Strength a coupleof notches, to B. This issue is ranked to lag the broadermarket averages in the year ahead.

D.C.

CHESAPEAKE ENERGY (CHK; 17.12)Latest Report page 429 12-12-08

Chesapeake Energy has reported lower-than-expectedfourth-quarter earnings. Share net declined 22% com-

pared to last year’s period and 14% on a quarter-to-quar-ter basis. Even so, the annual tally advanced roughly11% in 2008. This gain was largely the result of increasesin average daily production for both natural gas and oilof roughly 4.4% and 4.1%, respectively, which contrib-uted to solid results during the first half of 2008. How-ever, the severe decline in natural gas and oil pricesweighed heavily on results in the latter part of the year.Average realized natural gas and oil prices declined 12.1%and 24.5%, respectively. Considering the weaker-than-expected fourth-quarter results, the global economicdownturn, the ongoing credit crunch, and continuing fi-nancial market turmoil, we have trimmed our 2009 bot-tom-line estimate by 17%, to $3.00 a share. And, atpresent, these shares offer minimal investment appeal.CHK’s Timeliness rank has dropped one notch, to 4 (Be-low Average), and the stock provides below-average ap-preciation potential for the pull to 2012-2014.

B.F.

DEERE & CO. (DE; 33.49)Latest Report page 1339 1-23-09

Deere & Co., the huge machinery maker, has reportedearnings of $0.48 a share for the January quarter, down




40% from the year-before figure and lower than our $0.65estimate, which had been cut deeply in November.

The Agricultural segment increased its profits a bit,although currency translation reduced the gain. (In fact,the company expects a negative currency translationimpact on corporate earnings of about 6% for the fiscalyear ending October 31st.) However, the Commercial &Consumer and Construction & Forestry units faced toughtimes, as sales declined 25% and 28%, respectively. Thecombined operating profits for these two segmentsdropped from $125 million last year to a loss of $41 mil-lion in the January quarter. Finally, the important creditoperations’ profits fell 60%, reflecting narrower financ-ing spreads, lower commissions from crop insurance, andan increase in bad debts.

We have reduced our share-earnings estimate for fis-cal 2009 to $3.50, and we continue to have concerns aboutdemand in the farm sector, which has held up so far, eventhough prices for agricultural products have been quiteweak for months. The Timeliness rank on these shareshas fallen one notch, to 4 (Below Average).

M.L.S.

DOW CHEMICAL (DOW; 8.62)Latest Report page 1237 1-16-09

Latest Supplementary Report page 2429 2-13-09Dow Chemical, a manufacturer of basic chemicals and

plastics, has dramatically reduced its quarterly dividendfrom $0.42 a share to $0.15 beginning with the Aprilpayout. The company cited uncertainty in the creditmarkets, significantly lower demand for chemical prod-ucts, and weakness in the global economy as reasonsfor the reduction. As a result, we have lowered thestock’s Safety rank one notch, to 3 (Average), and thecompany’s Financial Strength rating two levels, to B+.This issue is ranked to underperform the broader mar-ket in the year ahead.

M.F.N.

WESTLAKE CHEMICAL (WLK; 13.70)Latest Report page 489 12-12-08

Chemical manufacturer Westlake Chemical has posteddisappointing fourth-quarter and full-year results. Thecompany recorded per-share losses of $1.68 and $0.45for the December period and full-year 2008, respectively.The difficult macroeconomic backdrop and sharp down-




turn in demand for its products will probably hinderWLK’s near-term progress. Still, we believe that the com-pany will return to the black in 2009 and earn $1.00 ashare. These shares are ranked to perform in line withthe year-ahead market.

O.S.

WYNDHAM WORLDWIDE (WYN; 4.00)*Latest Report page 2347 2-13-09

Wyndham Worldwide, one of the world’s largest hos-pitality companies, has posted relatively flat fourth-quar-ter results on a non-GAAP basis. However, the adjustedshare net of $0.47 excludes a sizable one-time, non-cashcharge of $1.4 billion, or $7.75 a share, for the impair-ment of goodwill associated with the reduction of its va-cation ownership business. Also excluded were expensesfrom restructuring activities ($0.25 a share), currencytranslation losses from its operations in Venezuela($0.14), and a nonrecurring gain from legacy adjustments($0.04). Looking ahead, the company expects adjustedshare net of $0.35-$0.40 in the first quarter, which isabove our estimate of $0.25. Although we have raisedour first-quarter share-net expectation by a dime to

match the lower tier of Wyndham’s guidance, we are leav-ing our full-year estimate of $1.75 unchanged. This stockis ranked 4 (Below Average) for Timeliness.

J.D.B.*Price as of 2:00 P.M. EST on 2-19-09

AMEREN CORP. (AEE; 26.44)Latest Report page 690 12-26-08

Ameren, a utility holding company, has cut its quar-terly dividend by 39%, to $0.385 a share. Even thoughthe company would have earned the dividend in 2009(assuming it attained its share-earnings target of $2.68-$3.08), the payout ratio would have remained uncom-fortably high, as it has been in recent years. The issuefell sharply upon the announcement and now has a yieldthat is fractionally above the utility average. We havecut our 2009 share-earnings estimate from $3.20 to $2.75.We advise income-oriented investors to wait for the dustto settle before making new commitments here, eventhough it appears as if this equity offers some dividendgrowth potential off of the reduced disbursement. Thisstock is ranked 3 (Average) for Timeliness.

P.E.D.




(Continued on page 242

WHOLE FOODS MARKET (WFMI; 12.74)*Latest Report page 1948 1-30-09

Whole Foods, an upscale, health food grocer, has posteda smaller-than-expected profit decline in the first quar-ter (ended January 18th). Share net fell 28% year overyear, to $0.20, on roughly flat sales of $2.47 billion. Our$0.17 estimate implied a 39% falloff from last year’s $0.28tally. Having said that, we’re leaving our full-year fiscal2009 share-net estimate unchanged, at $0.75, for now.Our assessment represents a 9% year-over-year decline.What’s more, it is nearly 50% below fiscal 2006’s $1.41high water mark. Whole Foods is struggling these days,as budget-constrained shoppers trade down to deep-dis-count food retailers like Wal-Mart. A recent preferredstock offering, meanwhile, has eased liquidity concerns,but is also diluting earnings. The Timeliness rank on thisstock has climbed one notch, to 3 (Average).

N.V.L.*Price as of 2:00 P.M. EST on 2-19-09




* For individual use on one workstation or PC.For multi-user environments please call 800-531-1425.

www.valueline.com

TAKE ADVANTAGE OF OUR INTERNET SITE!

Value Line’s Web site contains a wealth of information, including:

✔ stock market commentary three times a day✔ stock prices✔ stock price charts✔ company news✔ educational features

THERE IS ALSO MUCH MOREINFORMATION FOR SUBSCRIBERS TOThe Value Line Investment Survey

Subscriber-only information* includes:

✔ Access to each week’s publicationon Monday at 8:00 A.M., Eastern time

✔ Access to TimelinessTM Rank changeson Monday at 8:00 A.M., Eastern time

✔ An archive of all Value Line Investment Surveyissues published during the past three months

✔ Daily Supplementary Reports containingRecent News and Analysis

✔ Custom Reports

✔ Stock Screening

To access the subscriber-only items, subscribers should first go to our Web site,www.valueline.com, and then click on “My Value Line” in the left column,then click on "Value Line Investment Survey Online" under the left column

"Product Menu". From there, you can choose from the choices for this service.When asked, type in your User Name and Password.




Volume LXIV, Number 27 Part 3 of THE VALUE LINE INVESTMENT SURVEY (ISSN 0042-2401). Published weekly by Value Line Publishing, Inc., 220 East 42nd Street, New York, NY 10017-5891 and is accorded expeditious treatmentprescribed for newspapers. Subscription rate: One year in the United States and US possessions: $598. Foreign rates upon request. Periodicals postage paid at New York, NY and additional mailing offices. Canadian GST #127621837.POSTMASTER: Send address changes to THE VALUE LINE INVESTMENT SURVEY, 220 East 42nd Street, New York, NY 10017-5891. Copyright 2009 by Value Line Publishing, Inc.CHANGE OF ADDRESS: Please give four weeks notice and provide the old address label (as printed on the envelope) as well as the new address with zip code.Send to Value Line Publishing, Inc., 220 East 42nd Street, New York, NY 10017-5891.

Officers, directors, employees and affiliates of Value Line, Inc. (“VLI”), and Value Line’s investment-management affiliate, EULAV Asset Management, LLC (“EULAV”), a wholly-owned subsidiary of Value Line,Inc., the parent company of Value Line Publishing, Inc. (“VLPI”), may hold stocks that are reviewed or recommended in this publication. EULAV also manages investment companies and other accounts that usethe rankings and recommendations in this publication as part of their investment strategies. These accounts, as well as the officers, directors, employees and affiliates of VLI, may dispose of a securitynotwithstanding the fact that The Value Line Investment Survey (the “Survey”) ranks the issuer favorably; conversely, such accounts or persons may purchase or hold a security that is poorly ranked by theSurvey. Some of the investment companies managed by EULAV only hold securities with a specified minimum Timeliness Rank by the Survey and dispose of those positions when the Timeliness Rank declinesor is suspended. Subscribers to the Survey and its related publications as well as some institutional customers of VLPI will have access to the entire Value Line Investment Survey at 8:00 AM each Monday (orthe next business day after a Monday when the New York Stock Exchange is closed). At the same time, portfolio managers for EULAV will receive reports providing Timeliness Ranking information. EULAV’sportfolio managers also may have access to publicly available information that may ultimately result in or influence a change in rankings or recommendations, such as earnings releases, changes in marketvalue or disclosure of corporate transactions. The investment companies or accounts may trade upon such information prior to a change in ranking. While the rankings in the Survey are intended to be predictiveof future relative performance of an issuer’s securities, the Survey is not intended to constitute a recommendation of any specific security. Any investment decision with respect to any issuer covered by theSurvey should be made as part of a diversified portfolio of equity securities and in light of an investor’s particular investment objectives and circumstances.

Dear Subscribers,

As part of our ongoing efforts to keep The Value LineInvestment Survey the most valuable investment re-source for our subscribers, the entire service, includingall Ranks, is now being released on the Value Line WebSite at 8:00 A.M. Eastern Time on Mondays. You can accesseach week’s issue at www.valueline.com by enteringyour user name and password. We look forward tocontinuing to provide you with accurate and timely invest-ment research. Thank you.

Faithfully,

STOCK SPLITS AND DIVIDENDS DECLAREDNext Ex- See

Payment Date Page

Blyth Inc. 1 for 4 † Feb. 2 931First Horizon Nat’l 2.67% Mar. 11 615

★ Global Sources 10.00% Feb. 25 2369

S U P P L E M E N T A R Y R E P O R T S

Ameren Corp. ........................................... 239

AEGON ..................................................... 236

Autoliv, Inc. ............................................... 236

BJ’s Restaurants ....................................... 236

CBS Corp. ‘B’ ............................................ 237

Chesapeake Energy .................................. 237

Deere & Co................................................ 237

Dow Chemical ........................................... 238

priceline.com ............................................. 242

Westlake Chemical ................................... 238

Whole Foods Market ................................ 240

Wyndham Worldwide ............................... 239

(Continued from page 240)

★Newly added this week

†Reverse split.

PRICELINE.COM (PCLN; 80.32)*Latest Report page 2633 2-20-09

Shares of priceline.com, an online travel company,rallied following its fourth-quarter results. The companyreported share earnings of $1.29, exceeding both ourexpectation of $1.05 and the $0.96 it earned in the year-earlier period. Management has provided bottom-lineguidance of $0.85 to $0.95 for the first quarter of 2009,in line with our current forecast. Overall, we project sharenet of $6.25 this year. This issue remains well-rankedfor Timeliness.

M.F.N.*Price as of 2:00 P.M. EST on 2-19-09

Value Line Sample Feb 2009

Documents

Transcript of Value Line Sample Feb 2009