JDSU vs. QCOM--Appears JDSU currently has a run-rate PE of about 137, whereas QCOM's runrate PE (assuming 90 cents for Q4) is about 61...hard to believe JDSU will grow profits faster than QC, so I think QCOM is the better value based on PE; however, JDSU is in the hottest sector of all right now, so perhaps its valuation could grow even more (once runrate PE is over 100, why not 200...or 300? AOL showed it could be done). To me, it seems a lot of JDSU's multiple expansion is based on relative valuation scenarios (e.g., with Juniper, Sycamore, Cerent) as opposed to what is justified by earnings alone. Not saying it won't be a great performer going forward, but to me it seems the juice is more of the hot-sector effect than in QCOM's case. If the hot-sector effect should fade (look at Biotech for a real-world example), valuations will rely more on earnings, which could lead to (relative) price vulnerability.
JMHO, MM |
