Trader J's Inner Circle Message Board

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Strategies & Market Trends : Trader J's Inner Circle

NVDA 193.23

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3:59 PM EST

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To: Trader J who wrote (22711)	11/10/1999 9:58:00 AM
From: John Miz	Read Replies (2) of 56532

For your consideration. LTX Corp (LTXX)SemiConductor equipment company. Earnings November 18th. Strong price target and support from Gruntal....$35.00 target... Now only 19.00/share...Good momentum. Strong volume recently. From Gruntal. Raising price targets based on growing backlog and new customers The company is scheduled to release fiscal 1Q00 on Thursday, November 18, before the market opens. Our estimate for the quarter is $0.10 fully taxed versus the I/B/E/S consensus of $0.09. We are looking for revenue of $56.5 million and orders of about $60 million. The company continues to receive key endorsements from its major customers. As LTXX ramps its shipments during the next few quarters, we expect further build-up in order momentum ahead. We are revising our EPS estimates for fiscal 2000 to $0.55 on a fully taxed basis; we are also revising our estimates for fiscal 2001 and 2002 on a fully taxed basis to $0.85 and $1.10, respectively. Please note that the revisions would be increases if they were made on the nontaxed basis of our previous estimates. We are also raising our intermediate price target to $25 from $16 and our long-term target to $35 from $25. Reasons for 1-1 Outperformer Rating Our intermediate price target of $25 is derived by applying a multiple consistent with LTX's peak P/E relative to the last industry upturn in 1995 relative to the S&P index. In 1995, LTX traded at a 12% premium to the S&P 500 multiple. Currently, LTX is trading at a 20% discount to the S&P 500 based on our calendar 2001 EPS estimate of $0.95. If we apply LTX's 12% premium to the current S&P multiple of 25.1x it will imply a 28.0 multiple. Based on our estimate of $0.95, this valuation implies a price target of about $25. Furthermore, we believe there is a potential for strong price appreciation since the company is well positioned to capitalize on the industry recovery with new leading-edge products, improved cost structure, and operating practices.

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