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Electronic parts distributor Avnet, Inc. (AVT) is keeping its Sell rating from Zacks senior technology analyst Abdul Saleh now that the company's quarterly earnings report has come out:
'Avnet recently reported revenues of $4.75 billion in Q2 of fiscal 2008, up 22.2% from a year ago and exceeded our estimate of $4.53 billion. Overall gross margin dipped slightly to 12.5% from 12.7% in the prior-year period and 12.8% in the prior quarter due to a higher percentage of lower-margin TS as compared to EM in the business mix.
'Excluding onetime items, EPS came in at $0.89, beating our estimate of $0.85. On a GAAP basis, EPS was $0.93. Management expects to post EPS of $0.85 $0.89 on revenues of $4.37-$4.57 billion in the third quarter of fiscal 2008. Based on indications that its acquisition pipelines are filling up and is expected to offset declining organic growth, we now expect roughly $3 billion in annualized revenues from acquisitions made since 2007.
'However, given acquisition-related integration risks and concerns related to its high level of debt, we are maintaining our Sell rating and have set our target price at $35. This is 10.6x our FY2008 earnings estimate, which reflects the potential benefit from the Access acquisition and the expected bottoming of the semiconductor cycle.'
Read the full analyst report on AVT.
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