Zacks Analyst Blog Highlights: Flowserve Corp., BJ Services Co., Castle Brands, Inc., Canon, Inc. and Nippon Telegraph and Telephone Corp.

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Here are highlights from Friday's Analyst Blog:

Flowserve Bullishness Tempered

We reiterate a Hold rating on Flowserve Corp. (NYSE: FLS | Quote | Chart | News | PowerRating) and a $108 target price. In the second quarter, sales were up 24% year-over-year, while its backlog for new orders was also up 24%. These results demonstrate that the company continues to benefit from strong demand for products and services, which are used in infrastructure products around the globe.

Moreover, Flowserve's cost-cutting efforts have enabled the company to accelerate its earnings growth. In the second quarter, earnings increased 92% over the second quarter of last year. Nevertheless, we think those bullish points should be tempered by global growth slowing down and FLS shares trading at a reasonable valuation.

BJ Services Feels Price Weakness

BJ Services Co.'s (NYSE: BJS | Quote | Chart | News | PowerRating) fiscal third-quarter 2008 earnings, though below the year-ago level, managed to beat estimates on the back of revenue improvement in all the segments.

Importantly, the company appeared to have achieved price and margin stabilization in its core U.S. pressure pumping operations. However, it remains to be seen whether the trend can be sustained given the ongoing weakness in natural gas prices and the supply-demand imbalance in the pressure pumping market. Being a relatively commodity-type supplier, BJS remains particularly exposed to these headwinds.

Castle Brands Under Siege

Castle Brands, Inc. (NYSE: ROX | Quote | Chart | News | PowerRating) is a small capitalization company in the premium spirits industry. The company has an established distribution network in the United States. Despite rapid sales growth garnered through strategic relationships, joint ventures and acquisitions, the company has consistently operated at a loss.

Since the company has consistently operated at a loss and with negative operating cash flow, the stock is best valued on a price-to-sales basis. Since going public in April 2006, the stock has traded between 0.04 and 3.03 times sales. The stock is currently selling at a P/S multiple of 0.12. The target price is $0.50 per share based on a price-to-sales ratio of 0.25.

Canon ADRs Down to Fair Value

Japan-based Canon, Inc. ADR (NYSE: CAJ | Quote | Chart | News | PowerRating) is one of the leading designers, manufacturers, and marketers of office equipment, cameras, and optical products in the world. The company has been kept at a Hold rating for years, and has recently traded down from the low-to-mid $50s to the low $40s.

Canon slightly raised its 2008 revenue in light of new product launches scheduled for second half of 2008. However, strong Yen appreciation has hurt first half results. We believe there is meaningful risk that the company will not achieve its targets. We therefore maintain a Hold rating on CAJ shares and lower our price target to $42.50.

NTT Staying Big in Japan

Nippon Telegraph and Telephone Corporation (NYSE: NTT | Quote | Chart | News | PowerRating) is one of the largest phone companies in the world, mostly serving Japan, with approximately 54 million fixed-line customers and 51 million wireless subscribers. Although the Japanese telecom market has been open to competitors over the past decade, NTT remains the technology and market leader.

NTT's strategy is to maintain the leadership position in the domestic telecom market and capture selected international opportunities to drive long-term growth. Relative to the closest competitor in Japan, NTT's brand and omnipresence enables the company to aggressively handle competitive threats.

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