Jeff, her target is interesting.
$100 is based on her belief that a multiple in excess of 30 on her FY00 number is justified.
Her FY00 number is 3.00
The consensus is well below that.
1.73 (delayed Zack's via Yahoo)
1.72 (IBES via quicken.com)
"We believe that the 33.3 multiple is justified given that Micron's market share is expected to rise to 23% from 20% in the next 9 months..."
33.3 X 1.73 = 57.609
Well below $100.
Using the consensus number on her target, that's a multiple of 57.8 on FY00.
Looking at their 33.3 multiple in terms of Gruntal's own estimated 5-year growth rate of 18% is also interesting, as its 1.85 times the growth rate.
Again, using the consensus estimate of 1.73, that would put it at 3.21 times the growth rate.
[On the flipside, if it traded at the FY00 consensus estimate times the consensus growth rate of 19% Zack's is showing, it would be 32.87.]
And there's that term that I love so much "given that".
So her justification for the multiple of 33.3 is "Micron's market share is expected to rise to 23% from 20% in the next 9 months."
First off, I have some reservations about those market share figures.
Secondly, I'm wondering why she continues to recycle this same line.
For example, Gruntal's 4-22-99 comment also reads:
"We believe that the 33.3 multiple is justified given that Micron's market share is expected to rise to 23% from 20% in the next nine months."
We're two months past that date and yet it's the same language.
Why is it "nine months"? Shouldn't it be "seven months"?
That kind of stuff drives me nuts.
Good trading,
Tom
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