"Our $45 price target implies a P/E multiple of just over 18 times 1999 estimated EPS of $2.44 (fully taxed), still below the company's projected growth rate of 20% and the peer group average. We maintain our BUY rating."
HA HA HA HA HA HA! I can't laugh loud enough! HA!
I agree with 18 times 1999 earnings, but $2.44? Come on. I'm surprised GKM doesn't rate THQ a HOLD, because he's expecting 7.5% total growth over the next 6 quarters! HA! I knew that McGowen was on the low side of the analyst pool, but this is ridiculous! I really wonder how he gets his numbers. The pieces just don't add up, with these analysts. If you know everything that Farrell has said, and you know what their plans are for 1999, and you listened to the conference calls, and you look at previous successes from THQ (14 CONSECUTIVE QUARTERS OF IMPROVED OPERATING EARNINGS), and you look at the tremendous strength in the entire industry, and you look at THQ's historical growth, relative to the industry, and you understand the efficient operating model, etc., etc., AND IF YOU LOOK AT RELATIVE VALUATIONS, it would be quite obvious that THQ will have little trouble far outstripping estimates, YET AGAIN, and again, etc.
Let me simplify this:
Why would THQ, all of a sudden, grow less than 25% in 1999 (as Farrell had stated repeatedly they could do)? Why would THQ suddenly report negative year-over-year results in Q3 and Q4 (as GKM is hinting), when the reserves are very high? Why would THQ suddenly underperform the very strong software market, after growing at much faster rates during the last 3 years? Considering all of this, why does THQ still deserve a MUCH LOWER THAN AVERAGE valuation? Hmmmm?? Hmmmm...
Bring in the next clown, pleeeeze.
Todd |
