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Technology Stocks : USRX
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To: mauser96 who wrote (10072)2/3/1997 9:57:00 PM
From: Gary105   of 18024
 
Agree with your assessment of USRX. I'm still formulating an opinion
but my observations to date are:

1. Excellent company - the leader in modems and a key player in remote access.

2. If gross margins hold - they are undervalued.

3. On the way up over the last few years , it was priced at 15 - 20x future earnings. That would make current fair value 50 - 70.

4. The market is pricing it at current levels because it expects gross margin erosion as a result of competition - a strong possibility but by no means a certainty. EPS matched official estimates - but obviously did not match "whisper" estimates.

5. Looking at its long term chart its taking a needed rest after running from 6 to >100. 2 yr chart has head and shoulders pattern but is no need for alarm. Gap in the upper 50's was tested but not yet filled - a possibility. A gap was also created today -most networking companies were hit hard. Expect a lot of volatility short term.

6. In summary, a super company whose share price is resting after getting ahead of itself last year. Market is concerned about margin erosion and most likely wants to see next earnings report to resume confidence in margins. Possible lower move short term, but if margins hold this should create an excellent buying opportunity. Will continue to watch but not yet ready to buy.
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