A Temp Agency's Expert Timing

Despite its pricey price-earnings ratio, On Assignment could be right gn the money. As a provider of temporary help, On Assignment isn't your run-of-the-mill personnel-service company. It mainly supplies temporary help trained for medical laboratories, hospitals, and health-care clinics. With the medical and biotech businesses booming, it's no wonder that demand for On Assignment's temporary workers has been growing fast. And little wonder, too, that its stock has been on the rise.

The company went public on Sept. 22 at 7 a share. It's now at 9 1/4, and some pros say On Assignment is destined for higher ground. "Our 6-to-12-month target for the stock is 12 to 14 a share, using a p-e ratio of 25 on a 1993 earnings estimate of 50 cents a share," says analyst Davon Glacalone of Unterberg Harris, a New York securities firm. He expects earnings of 37 cents this year.

Glacalone says On Assignment has the potential of raising its revenue to $100 million to $125 million in three to four years, from the 1992 estimate of $32.5 million. Some of the nation's top drugmakers are among On Assignment's biggest customers: Abbott Laboratories, Hoffmann-La Roche, and Bristol-Myers Squibb.

Analyst Kevin Clark of Advest says On Assignment deserves a higher price because of its strong earnings prospects (even in a slow recovery), healthy cash flow, debt-free balance sheet, and high return-on-equity of 30%. His target in the next three years: 27.

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