Compaq Message Board - Msg: 12124016

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Technology Stocks : Compaq

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To: rupert1 who wrote (72785)	11/28/1999 12:25:00 AM
From: rupert1	Read Replies (1) of 97611

Here is a post from Yahoo Club about Prudential setting a target of $49 on COMPAQ and giving it a STRONG BUY rating. Just remember that Prudential were always among the very bullish on COMPAQ and their previous targets were not met. Also note that the target of $49 requires a forward p/e of 39. When was the last time that COMPAQ enjoyed a forward p/e above 30? My own target for 2000 is $60 as of the end of Janaury 2001 based on 2000 earnings of $2.00 and 2001 earnings of about 2.75 So by January 2001 the p/e would be looking forward to $2.75 and the p/e would be in the 25-30 range. All this assumes no negative surprises and the effective execution of current plans. My target for July 2000 is in excess of $40 because the earnings for 2000 would be proving to be better than the current average projections and the forward p/e would be discounting until July of 2001. My target for end of January 2000 is a $30-32 with a spike just before or after earnings to $36. I think that the price will fall again to the $26-32 range before moving higher in the summer above $40. The single biggest threats to these projections would be the potential failure of MC to execute the cost cutting measures completely, swiftly and effectively and other ill-considered acquistions which are not immediately accretive. _________________________________________ Re: Prudential Select List jjkozub (67/M/Maryland) 11/27/1999 10:03 pm EST I can confirm that CPQ has made Prudential's Select List with a Strong Buy, on Nov. 24. Prudent sets as Target Price: $49. In a supporting analysis to justify the strong upgrade, PRU cites: (a) strong demand along all business segments; (b) sale of Alta Vista stake and acquisition of 16.1% of CMGI stock;benefits from restructuring ($2B cost saving); (c) agreement with Cable & Wireless. $49 price target is based on PE of 39 for FY 2000 earnings. They caution that "it is too early to jump back in aggressively", nevertheless they view momentum as improving, and foresee acceleration in top line growth in 2000. Can't say more. Look it up at client.prusec.com; easiest if you're a Prudential client. After all these months, the end of agony may be in sight and CPQ may once again give Dell a run on Wall Street. Remember the story of Apple, when it had fallen to $16 (and somewhat below), then came back strong with Steve Jobs at the helm.Time may have come to average down (or up, depending where you started). JJKozub

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