I haven't followed them closely. I think last time you mentioned
them, I did a little reading and noticed that the merger deal
fell through. It seems like CCIR sales have been flat for a while.
The analyst's rank CCIR pretty well.
Don't feel bad about JBIL. I bought a bunch a while back at $13
and something, only to panic sell at $12 and something a short
time later. At least CCIR has been a safe haven lately. Many
small tech stocks have collapsed.
Here is some CCIR memorabilia from June 3, 1996:
ADDING CCIR TO THE CHICAGO CORPORATION`S PRIORITY LIST
10:11am EDT 3-Jun-96 Chicago Corp. (Robert Johnson 312/855-6006) CCIR
ADDING CCIR TO THE CHICAGO CORPORATION'S PRIORITY LIST
THE CHICAGO CORPORATION RESEARCH NOTES
Subject: Continental Circuits Corp. OPINION
(CCIR13 3/8)OTC =======
Current: BUY
Analyst: Robert M. Johnson, CFA (312)8556006
Joseph P. Beaulieu (312)8555622
===========================================================================
Date: May 31, 1996 Price Target: $21
___________________________________________________________________________
Earnings Per Share Cal. Shares 52
P/E LongTerm O/S Week
7/95A 7/96E 7/97E 1997E Growth Rate (Mil.) Range
Current: $0.99 $0.98 $1.40 9.6X 20% 7.4 18-10
___________________________________________________________________________
1Q/Oct 2Q/Jan 3Q/Apr 4Q/Jul Total
1995A 0.24 0.21 0.27 0.26 0.99
1996E 0.30A 0.31A 0.19A 0.18 0.98
1997E --- --- --- --- 1.40
___________________________________________________________________________
o CCIR's price is compelling, at 9.6 times our 1997 earnings estimate.
o Our 20% long-term growth rate estimate still has upside potential.
o New product offerings during summer and fall could help strengthen computer
sector, benefitting CCIR
___________________________________________________________________________
We are adding Continental Circuits to The Chicago Corporation's Priority List,
based on both its compelling longterm story as well as its very attractive
valuation. We think the stock is particularly timely now, as some of the orders
that slipped out of the April period are beginning to reappear. More
specifcally, one large and high profit margin laptop product has now been
cleared to begin delivery in June, with a rampup to full production likely to
occur by the end of the July quarter. In addition, we think the company is
nearing resolution regarding the "make or buy" decision concerning a quickturn
facility for customer prototypes. (The rest of CCIR plant focusses primarily on
highvolume parts). Such a facility would provide the company with an additional
growth outlet as well as enhance overall margins.
Our price target for the stock remains at $21, representing a 15 multiple on our
fiscal (July) 1997 estimate of $1.40. There is upside room in our estimate
based on the potential for higher gross margins and the above noted quickturn
opportunity. Given that we believe the company has a 20% long term-growth
potential and high return on equity, we also believe there is additional room in
our multiple target. We also note that many of chip manufacturers have begun
to perform better, and this is often a precursor for moves in the printed
circuit board manufacturers and contract manufacturers. On a valuation basis,
the stock remains very compelling at 9.6 times year ahead earnings.
The key risk in the story is overall softness in the computer hardware market
place. During the April/May time frame, a number of board manufacturers noted
weakness, especially in the computer sector. We believe the bulk of the
slowdown related to overbuilt inventories of computer equipment. While end user
demand remained strong, the parts shortages which drove many manufacturers to
increase orders disappeared, resulting in bloated inventories. An above average
number of product transition issues across the industry also hurt demand. A
notable example would be HP's new line of servers expected early this fall. In
addition, we would expect that the new version of NT server software from
Microsoft scheduled for shipment later this year could spur server purchases,
reinvigorating second calendar-half growth for the entire hardware industry.
Because strong customer relationships and excellent reporting controls, CCIR was
the first
company to report industry softness. The company is now reporting that business
is beginning to pick up, potentially boding well for the entire industry.
* The Chicago Corporation makes a primary market in this security.
# The Chicago Corporation managed or comanaged a public offering of securities
by this
company within the last three years.
===========================================================================
This material is not intended as an offer or solicitation, may not be complete
and is
subject to change. The Chicago Corporation and its employees, including the
employees who
prepared this reports, may hold a position in the securities discussed herein or
in
options, rights or warrants to purchase such securities. The Chicago
Corporation may
participate in future offerings of such securities and may act as a financial
advisor to
the companies discussed herein. The Chicago Dearborn Company is a strategic
partner of
The Chicago Corporation for investment banking purposes.
First Call Corporation - all rights reserved. 617/345-2500
END OF NOTE
FCviaNewsEDGE
BROKER: Chicago Corp.
:TICKER: CCIR
:SUBJECT: HARD CONW USA
Copyright (c) 1996 First Call Research Notes
Received by NewsEDGE/LAN: 6/3/96 9:29 AM |
