The new millennium began with analysts spouting extravagant price targets, often hundreds of percent above the market value of the stock in question. That doesn¿t happen very often any more.

Here and there we still see things like

Lehman Brothers

evaluating

Terayon Communication Systems

(TERN)

at $165 a share, although the stock was diving towards $20. But in general investment houses and their analysts have developed cold feet from the cold water investors poured over technology stocks.

Which led us to take a look at

UBS Warburg

analyst Stephen Levey¿s latest report on

Nice Systems

(NICE) - Get Report

, a maker of digital recording systems. Its third-quarter results edged above forecasts, which didn¿t stop Tel Aviv investors from hammering the stock. Nice ended Wednesday's session down 11.5% to $42.

Levey downgraded Nice from strong buy to buy. But his report indicates that Levey, like his colleague Victor Halpert of

Salomon Smith Barney

, doesn¿t know of any dramatic event that could justify the stock¿s free-fall. More interesting was his price target of $80, double the price on the market. Halpert went even further, setting a target of $100.

Levey expects that Nice¿s earnings per share to dip a cent or two this fall from expectations of 60 cents because of its $30 million purchase of Stevens Communications, a private company in Chicago. He also lowered his earnings forecast for 2000 to $2.12 a share from $2.20, since until the transaction is finalized, in early December, Nice can¿t include its own sales made in the U.S. via SCI.

He also lowered EPS expectations for 2001 from $2.65 to $2.50, mainly because of the high cost involved in developing and selling NiceVision, a digital video and audio recording and management system used by the

Bank of England

, casinos and the

Maricopa County Jail

in Phoenix.

On the other hand, Levey expects that NiceVision and the purchase of SCI will push the company round the corner and he's raised his earnings forecast for 2002 from $3.07 to $3.30. NiceVision third-quarter sales are up 13% from last year's quarter and he believes it will generate $240 million in sales next year, vs. $173.5 million in 2000.

The shift to direct marketing in the U.S. is a real test for Nice, Levey says, since not a few Israeli companies have failed the shift to independent distribution in the U.S.