AT&T Message Board - Msg: 979908

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Technology Stocks : AT&T

T 27.03

-0.9%

3:22 PM EST

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To: Mike McFarland who wrote (230)	3/13/1997 9:12:00 AM
From: Bob Smith	of 4298

Mike, <<So maybe you can all tell me how nuts I am for buying April 40 calls. You can compare this company to lots of the other biggies and it looks terrific on a PE basis. So, are newbies like me going to get screwd, why is nobody buying T at these prices?>> I have to kindly disagree with your analysis. "T" has typically traded at a PE of 10...which is typical of a non-growth utility stock. If you apply the same PE ratio to "T's" OWN anaylsis of a $3.45-$3.75 share estimate --- LESS the growth initiatives ($8-$9B)which will impact earnings between $.75 - $1.00/share. This leaves a share range of $2.45-$2.75...this is why Grubman said $2.55 for '97 is his estimate. Can't speak for the other analysts. So if you apply a PE of 10...you should have a stock trading between $25-$28/share...maybe a bit higher because of the dividend. "T's" plan for growth is back-end loaded. The $5-$6.00 share estimates ramp up in 1999-2000. Not 1997 or 1998. Please feel free to comment or correct. Bob

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