[Dain Rauscher Wessels reiterates "Buy Aggressived". Target $54.]
Found on Yahoo...
10:49am EST 8-Mar-00 Dain Rauscher Wessels (Searle, CFA, Scott
(612)313-1219)
[12 ú Rcvd: Mar 8, 08:58 PM EST ]
TFN First Call
March 8, 2000
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
* Quarter appears to be on track to meet expectations; outlook building for
June.
* Altium sequential ramp continues with both revenues and orders.
* Product development is underway to further position Digital Microwave as a
premier player of broadband PTP solutions.
* We are raising our 12-month price target to $54 and maintaining our Buy-
Aggressive rating.
Digital Microwave Corporation
NASDAQ:DMIC
Rating: Buy
Risk: Aggressive
Price Target: $ 54
Mar 8, 2000
_____________________________________________________________________________
Price: $36.38 | Fiscal Yr Prev EPS P/E
52-Wk Range: $42-$7 | Mar/1999A ($0.47) NM
Tr. 12 ROE: NM | Mar/2000E $0.13 NM
3 Yr EPS Gr: 40.00% | Mar/2001E $0.40 91.0x
Shares Out: 71.50 million | 2001 Q1 $0.07
Book Value: $2.82 |
Market Cap: $2.60 billion |
_____________________________________________________________________________
Calendar Yr Prev EPS P/E
Mar/1999E $0.02 NM
Mar/2000E $0.34 NM
_____________________________________________________________________________
__________________________________________________________________________
WIRELESS COMMUNICATIONS
Scott Searle, CFA
(612) 313-1219
ssearle@dainrauscher.com
DMIC:B-Aggr;PART 2/2: QUARTER ON TRACK, ALTIUM RAMP CONTINUES; RAISING PRICE
TARGET
continued...
Stock Opinion
((Raising Price Target To $54:))
||As the market continues to focus on broadband access and backbone
technologies, we believe investors will gravitate to Digital Microwave as a
leader in broadband PTP wireless, which remains dramatically discounted to
other broadband segments. For example, in the broadband access market,
industry leaders such as Netro (Nasdaq: NTRO; SB-Agg, $59) in wireless and
Copper Mountain (Nasdaq: CMTN; SB-Agg, $93) in DSL trade at 21x and 13x 2001
revenues, respectively. In contrast, DMIC shares trade at 6x 2001 revenues.
Additionally, fiber vendors such as Ciena (Nasdaq: CIEN; SB-Agg, $169), JDS
Uniphase (Nasdaq: JDSU; SB-Agg, $287), etc. trade in excess of 20x 2001
revenues. We believe these names will prove to be viable comparables as the
company continues to establish its presence as an extension and, in some
cases, an alternative to fiber.
||
||Using a blended multiple of 5x-6x core narrowband revenues and 18x-20x
broadband (Altium) revenues, we reach a price target range of $51-$58. While
our assumption for the core narrowband multiple is at the high end of the
historic range (more than 5x) we believe it is reasonable given the product
breadth of the company, which has resulted in multiple bundled sales in
recent quarters (20%-plus of sales in the December quarter). Hence, the
broadband business is pulling the narrowband business through the channel.
Meanwhile, we view the broadband multiple as extremely reasonable given the
increasing focus on broadband technologies, multiples of other high-profile
broadband wireless players, and an expanding presence for the company as a
viable extension or alternative to fiber, particularly in emerging markets.
We maintain our Buy-Aggressive rating with a $54 12-month price target. |
