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Technology Stocks : Qwest Communications (Q) (formerly QWST)
Q 80.96+2.2%12:59 PM EST
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To: myturn who wrote (4101)6/15/1999 8:17:00 PM
From: Brian Malloy  Read Replies (1) of 6846
 
Yes, QWST could gap up big tomorrow if the deal is called off. Then QWST could rise back to $44 in short order.

However, you must consider that prior to this deal the long term growth rate on Qwest was pegged at 40-50% depending on who you listen to. If the deal goes through, the growth rate according to some is expected to drop to 16% (a drop of more than 50%). WCOM has had a growth rate of 20% over the last five years which is expected to accelerate to 30% for the next five years. It sells at a PE around 96. QWST is just starting to make money. If it begins to morph into a more traditional looking teleco, what should it trade at?

Now my little thumbnail growth sketch is not perfect. Pick your own numbers or targets and think through it yourself. If you choose to simply ignore the issue and not look at growth rates and valuation you may get blind sided again.

As we speak, you can rest assured that the analysts which cover QWST are figuring out what to say. I think it is unlikely they will upgrade the stock at this juncture. At best they will maintain their current ratings or go to neutral. If they do the latter, my initial price target is $31.

IMHO
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