Attached is a report issued on pre 3:2 split on Aug. 19,99. Apparently, T&M got some attention lately and NATI has gained. Look at following ni stat, one will understand why:
Year Earn/Shr Income Revenue Equity
1998 0.73 37.39 274.23 4.13
1997 0.66 33.63 240.88 3.30
1996 0.51 25.49 200.72 2.60
1995 0.36 17.42 164.82 2.04
I don't see NI to slow down any time soon.
If one bought at last year high, the gain > 30%. If one bought at last year low, today's gain > 100%! Either way, it's a merry investment w/o much worry. NATI went down to below $14 last Oct, will it happen this year so all of us will have a golden opportunity to accumulate? (ws)
CREDIT SUISSE FIRST BOSTON CORPORATION
Equity Research Americas
U.S./Technology/Computer Channel & Peripherals
BUY
MID CAP
National Instruments (NATI)
We expect annual NI Week event to draw positive investor
attention and view recent price drop as buying opportunity.
Summary
We expect NATI's annual NI Week user conference/trade show to
draw positive investor attention. Given near 20% price drop
in last few weeks, we believe this creates a buying
opportunity. Reiterate buy.
Attendance and the number of companies exhibiting at NI week
is up more than 25% over last year, providing evidence of
NATI's growing market presence.
New LabVIEW RT (real-time) products, a key focus at the show,
could dramatically extend NATI's market by enabling a new
class of more reliable, more predictably responsive, and
smaller virtual instruments.
Test and Measurement market appears to be recovering momentum.
Spin offs of Hewlett-Packard and Tektronix test and
measurement divisions could increase investor interest in this
sector.
3 for 2 stock split for holders of record as of August 5 will
be effective as of Monday, August 23, 1999.
Price Target Mkt.Value 52-Week
8/18/991 (12mo.) Div. Yield (MM) Price Range
USD 39.6 $55 - - $1,311 $48.25-17.5
Annual Prev. Abs. Rel. EV/ EBITDA/
EPS EPS P/E P/E EBITDA Share
12/00E $1.58 1.58 25.0X 102% - $2.60
12/99E 1.37 1.36 28.9 108% 2.26
12/98A 1.12 1.12 35.5 117% 1.92
March June Sept. Dec. FY End
2000E $0.36 $0.38 $0.38 $0.45 Dec 31
1999E 0.31 0.33 0.33 0.40 1
1998A 0.26 0.27 0.27 0.32
ROIC (12/98) 31%
Total Debt (12/98) $5 mil.
Book Value/Share (12/98) $4.47
WACC (12/98) -
Debt/Total Capital (12/98) 0.3%
Common Shares 33 mil.
EP Trend2 Positive
Est. 5-Yr. EPS Growth 18%
Est. 5-Yr. Div. Growth -
1On 8/18/99 DJIA closed at 10,991.4 and S&P 500 at 1332.8.
2Economic profit trend.
National Instruments develops, manufactures, and markets PC
software and hardware that engineers and scientists use to
build flexible instruments for test and measurement and
industrial automation applications.
Investment Summary
We expect NATI's annual NI Week user conference/trade show
that runs from August 18, 1999 through August 20, 1999, and
the concomitant analyst conference to draw positive investor
attention. Given near 20% price drop in last few weeks, we
believe this creates a buying opportunity. Hence, we
reiterate our buy rating and our price target of $55.
With nearly 1,200 people registered for the conference,
attendance is up about 25% over 1998. About 80 companies are
exhibiting at the trade show up more than 40% over last year.
Most of the attendees are the scientists and engineers who
use NATI's software and hardware in combination with PCs to
build test and measurement devices or to automate industrial
processes.
Exhibitors, who pay a fee to NATI in order to participate,
come from a broad range of companies. They include Test and
Measurement device manufacturers like Genrad who partner with
NATI to develop products or use NATI hardware and software on
an OEM basis; companies that develop custom test and
measurement devices for individual customers; and
manufacturers of complementary products.
LEGO, the giant toy manufacturer, is also an exhibitor. The
company's Robolab,product is a kit of lego blocks, motors,
microprocessor driven controller cards, and other components
that children (or interested adults) can use to assemble
devices that have moving parts and/or can be self propelled.
NATI's LabVIEW is an integral part of the kit; it's used to
program the devices.
National Instruments manufactures and develops hardware and
software products that are used in combination with PCs to
built test and measurement instruments. Instruments that are
built with this approach are termed "virtual instruments" to
distinguish them from traditional test and measurement
instruments that were built as special purpose essentially
fixed function devices. Since it's possible to build virtual
instruments that duplicate the functions of many traditional
instruments, virtual instruments can be thought of as an
alternate technological approach to the task of building
instruments. They are potentially, to use Clayton Christenson's
term, a "disruptive technology.".
The extent to which virtual instruments can replace
traditional instruments is limited to some degree by the
speed and power of the PCs that are used to build them. As
PCs have become faster, virtual instruments have been able to
compete with or displace a growing class of traditional
instruments.
Processor speed is not the only limiting factor here. PCs are
not always reliable, in that they can crash. In many test and
measurement applications, reliability is a critical factor.
The new LabVIEW RT (real-time) products, a key focus at the
show, could dramatically extend NATI's market by enabling a
new class of more reliable, more predictably responsive, and
smaller virtual instruments.
The Test and Measurement market went through a down phase
from March, 1998 through the first quarter of this year.
Although NATI continued to grow during the down phase, it was
not entirely unaffected. Thus, the news that the Test and
Measurement market appears to be recovering momentum, is a
real plus for NATI. The Asia/Pacific market is recovering. In
their most recent quarters, Hewlett-Packard and Tektronix
reported significant sequential growth, and HP's measurement
business actually grew yr/yr
Earlier this year Hewlett-Packard announced that it intended
to spin off its test and measurement business (together with
its semiconductor division) as a separate company. An S1 for
the spin-off, to be called Agilent, was filed recently. More
recently Tektronix, another test and measurement giant,
announced that it would also spin off its test and
measurement division as a separate company. We believe the
introduction of two new giant public test and measurement
companies will bring more investor attention to the test and
measurement sector, and that given the strength of NATI's
story, this will be a further positive for NATI stock.
Theú 3 for 2 stock split for holders of record as of August 5
will be effective as of Monday, August 23, 1999.
N.B.: CREDIT SUISSE FIRST BOSTON CORPORATION may have, within
the last three years, served as a manager
or co-manager of a public offering of securities for or makes
a primary market in issues of any or all of the companies
mentioned. |
