WIND Analyst Comments
Michael Kwatinetz at Deutsche Morgan Grenfell
Raising FY98 and FY99 to .60 cents and .75 cents
" Last year bookings were up 51%, and we believe that it probably increased in similar fashion this quarter. It appears that Wind River is managing top line growth in the low to mid 40% range. Based upon what we have seen, this could prove sustainable for several more years, especially if new opportunities like I20 begin to ramp"
Sounds impressive!! Then he says
"We want to take a more conservative view, and have lowered yr./yr. growth forecast sequentially for Q2, Q3, and Q4"
I think this is why the stock went down. He scared off a lot of the growth momentum players. He left Q2 and Q3 numbers the same and bumped up Q4 by a penny to .20 cents.
He goes on to say " Company guidance and our forecast does not include I20 revenue. One risk in WIND is that it is trading at around 55 times revised four quarter forward estimates. However, this is within the past year's trading range of roughly 40-72 times. We expect estimates to rise after last nights EPS release, and believe underlying revenue and earnings growth could remain at or above 40% next year. I20 opportunity has the potential to sustain 40% + growth beyond FY99. We maintain our Accumulate rating".
6 Reasons to Buy WIND
1 32/64-bit RTOS/tools market projected to grow at 35%
2 WIND is leading 32/65 bit RTOS vendor, and is gaining share.
3 Business Model creates recurring revenue.
4 Intel I20 initiative provides potential revenue upside
5 Support for Windows development in Tornado doubles potential WIND developer market.
UBS Securities, Moody Gibbs
" In order to reflect WIND stronger than expected results in 1Q98, we are raising our FY98 revenue estimate from $89.6 million to $90.9 million and our FY98 EPS estimate from $0.55 to $0.60, which reflects our view of an improving margin structure".
No estimate yet for fiscal year "99"
Hambrect & Quist
FY98 $0.59 FY99 $0.70
"Due to the low stock price at the end of the quarter, the share count was about 400,000 shares lower than we had forecast. Had the share count been closer to our estimate, the EPS fiqure would have been $0.10 per share."
"We continue to rank WIND shares a buy. We believe the company addresses a very exciting market opportunity, is working with many of the most innovative companies in the world, and is executing well on its high growth, high margin business plan, and that therefore the shares should be considered a core holding in any technology stock portfolio." |
