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CRA International (CRAI)

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CRA International's (CRAI) first quarter 2011 earnings beat the Zacks Consensus Estimate, primarily owing to an uptick in utilization rate backed by successful restructuring actions. The company also continues to enhance its margin through its cost-saving initiatives.

In spite of clients' cautious aggregate spending, business conditions have started to improve with a healthy new business lead flow, an improved conversion rate, and an active pipeline of both litigation and management consulting businesses. Going forward, we believe the company's growth initiatives, healthy cash balance, new business wins, and international expansion will help generate positive results in the long term.

Hence, we upgrade the stock from Neutral to Outperform. Our six-month target price of $30.00 per share equates to about 20x our earnings estimate for 2011. With no dividend to supplement, this target price implies an expected return of 19.6% over that period.

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