Mark: You write: "Historically (over the last 5 years), ADPT has traded on a PSR of
between 2 and 4. It has had high profit margins and CONSISTANT
earnings growth, and so deserved a high ratio. For a company
of ADPT's size I would guess a "neutral" PSR of around 1.5 "
But you must take into account two additional factors, once the Symbios acquisition is complete, you have to add $600 to $700 MM in sales (no share dilution since they'll pay with the cash they have on hand), and furthermore, they will regain some pricing power.
The second factor is related to the fact that that ADPT is, I believe, impacted by a slowdown and margin pressures from the DD segment, a factor that might disappear once the DD segment revives and once stability returns to the rim.
Having said this, I still think that in the short term, 19 will not hold.
Zeev |
