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Technology Stocks : Raptor - Where does it go NOW?
RAPT 57.690.0%Feb 6 9:30 AM EST
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To: Bosco who wrote (395)7/18/1997 2:39:00 PM
From: Tuan Phan   of 652
 
Prudential Securities currently has a BUY on RAPT with a 12-month target of $18. CPQ exercised their warrants and increased their stake in RAPT to 7.7%. It is possible that a buyout play may take place...but is unlikely at this time. CPQ foresees a growth in demand for internet security. Secondly, they also foresee an increased demand for PC from the current level of 40%/household.

Why do I like RAPT? The number currently show that at a price of $11 1/2, its trailing P/E multiple is about 54.8. If you look at the fundamentals of the company, one can say that this company is in very good shape. Their current ratio is over 13 with about $5/share in cash and short-term investment with zero debt. Therefore, if one were to buy RAPT, one would really be paying $6/share or a real trailing P/E of 28.6.

The First Call estimate for this company in growth of EPS is about 40%, therefore, the PEG ratio is about 0.71 versus a perceived market PEG of 1.37 (using 54.8X PE). That is a difference of 48% from the perceived value. Secondly, the industry PEG is about 1.65, almost 2.5 times the real PEG ratio for the company.

I believe that this company is undervalued at current market price foresee it to run up on positive earnings news to be released.
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