Zacks Analyst Blog Highlights: PeopleSupport, Vonage, Goodyear Tire & Rubber, Hittite Microwave and Plexus Corp.

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Here are highlights from Monday's Analyst Blog:

PeopleSupport Stays a Buy

PeopleSupport, Inc. (Nasdaq: PSPT | Quote | Chart | News | PowerRating) is well-positioned to benefit from the fast-growing offshore BPO (business process outsourcing) market. The company's rapid revenue growth and investments production capacity in the Philippines and Costa Rica resulted in a negative earnings surprises and significant near-term margin contraction. The news drove the stock down to reasonable valuation levels as earnings momentum investors exited their stock positions.

PeopleSupport's long-term prospects are still promising despite the loss of the Vonage (NYSE: VG | Quote | Chart | News | PowerRating) contract in 2007. The management strengthened the company's position by pursuing industry verticals and expanding geographically. It maintains a strong balance sheet with minimal debt. The stock is rated a Buy.

Gaining Traction at Goodyear Tire

Goodyear Tire & Rubber Company (NYSE: GT | Quote | Chart | News | PowerRating) is benefiting from a major restructuring program along with lower raw material costs and improved-selling prices. However, weak tire volumes compel us to rate the shares a Hold with a target of $20, which implies a P/E 6.5x our 2008 EPS estimate.

Goodyear Tire's strength lies in its exposure to the strong heavy-truck market. This helps Goodyear better than its peers in hedging against earnings volatility in the tire industry. Profit margins are expected to improve. The company is cashing in on its well-received new tire designs such as Eagle F1 and expanding its reach in the consumer replacement market, as well as commercial original equipment manufacturer (OEM) and replacement markets in North America.

Hittite Microwave Still Hot

Hittite Microwave Corp. (Nasdaq: HITT | Quote | Chart | News | PowerRating) is a leader in integrated circuits, modules and subsystems for wireless communications. The company has a broad product portfolio across a large portion of the frequency spectrum, including radio frequency (RF), microwave and millimeterwave.

Hittite is poised to grow from its international business, focus on new products and deeper penetration into existing customers. The company reported a strong first-quarter and we still expect double-digit revenue growth for the full year. We therefore maintain our Buy rating on the shares.

Plexus Top-Tier in EMS Market

Plexus Corp. (Nasdaq: PLXS | Quote | Chart | News | PowerRating) has posted several quarters of strong results, with significantly higher than expected revenue and bookings. Although EPS has not been as strong, much of this is related to a higher tax rate.

We believe that PLXS is among the best positioned in the industry and is poised to grow in the medical segment as well. The company's outlook continues to be strong in spite of macroeconomic concerns, which have yet to affect its customers.

Plexus entered into a financial recapitalization program, under which the company plans to repurchase up to $200 million of its common stock, which we estimate will be accretive to EPS by several cents this year. We maintain a Buy rating on the stock.

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