Latest S&P Report on RDRT 3/20/01
by: lisa495 (28/F/NY) 03/27/01 01:53 pm EST
Msg: 24616 of 24744
Overview - 20-MAR-01 Key Stock Statistics
We expect FY 01 (Sep.) revenues to climb 35%, after
drops of 22% in FY 00, 11% in FY 99, and 30% in FY
98. Projected growth reflects the smaller revenue base
from which RDRT is starting, and increased unit volume
resulting from a broadened presence at major OEMs.
Gross margins should benefit from the FY 00 consolidation of
wafer fabrication and headstack operations,
along with a moderation of the pricing pressure the company
has historically experienced.
Pricing was about flat in the
first quarter, after unexpectedly rising
nicely in the fourth quarter. Also reflecting an expected
tight rein on operating costs, we forecast EPS of $0.55
for FY 01. However, this forecast is highly dependent
on a moderate pricing environment, and on continued
satisfactory operational execution, both of which have
been issues in the past. We expect Scion Photonics to
contribute modestly to revenues in FY 01.
Valuation Comments 3/20/01
The shares are up about 86% thus far in 2001, as
vestors have responded to improved revenues and
margins as well as the news that RDRT had formed
Scion Photonics, a joint venture with Tyco International Yr.
to make optical components. RDRT posted $0.11 EPS
in the first quarter, beating the street consensus by
$0.09. We expect the company to benefit from a strong
ramp of new 30 GB per platter GMR heads, as well as
an improved cost structure.
We have been impressed
by how quickly RDRT has been able to stabilize gross
margins. While there is a risk of missed revenue and
EPS targets due to the current economic slowdown and
a resulting slowdown in demand for hard disk drives,
given the marked improvement and a modest P/E ratioof
14 times our FY 01 EPS target, we feel the shares
will continue to outperform the overall market.
No cash dividends have been paid. |
