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Wells Fargo Upgrades Mentor Graphics to 'Buy'

Analyst Jennifer Jordan is confident in her outlook for the software company's first and second quarters of 2003

Wells Fargo upgraded Mentor Graphics (MENT ) to buy from hold.

The company says it expects to meet the 27 cents fourth quarter consensus estimate, excluding goodwill. Analyst Jennifer Jordan says the near-record fourth quarter book-to-bill ratio gives her confidence in Mentor's first quarter and second quarter 2003 outlook.

Jordan notes the company cited strengthening in business, particularly in printed circuit board and emulation products. Shares are trading at only nine times her 96 cents 2004 earnings per share estimate, and she looks for shares to trade off a higher multiple going forward.

Jordan thinks Mentor commands a multiple of 15, which is at the low end of historical levels; as a result, she has a $14-$15 target.

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