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Technology Stocks : Intel Corporation (INTC)
INTC 50.59+4.9%Feb 6 9:30 AM EST
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To: jon wilson who wrote (8087)1/14/1997 1:04:00 PM
From: P.Prazeres   of 186894
 
I seem to remember the same thing being discussed when 3rd quarter earnings were release (with regards to "pushing" revenue forward to the next quarter)...

Any way, this is what to think about. Let's say that intel comes in at $2. That's great. If they repeat that for the 4 quarters of 97 then 97 has $8/share. 20x that is 160 , so right now intc is undervalued if you believe that the market will now continuously value intel at a p/e of 20.
But intel will probably (if you look at the optomistic estimates) earn 8.75 to 9 / share in 97...which translates to a price of 180 for 97's earnings or about 20% (30 points) higher than where we are right now...
This is why I think 2.25 tonight would stump any short term correction in INTC.
Of course, if the market thinks that INTC now deserves a p/e of 25 then 220 is the price target or 46% higher than where we are right now. But I think that in the long run a p/e of 25 is a bit too high...that kind of excess would be taken away eventually.

Having said all of this, INTC has to successfully and consistently beat estimates in 97 to maintain it's price. Right now and looking forward in 97, any SLIGHT disappointment would more than likely crush the stock and take out the excessiveness.

So the question to ask yourself is..."Do I think that Intel will beat the highest estimates for 97 and is there ANY chance of some disappointment?" If the answers are yes and no then keep buying because the price is still low.

Finally, I took my profits this afternoon and will wait and see what happens tomorrow.

Paulo
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