JDSU: Raising Price Target To $320
JDS Uniphase Corp(JDSU)*
Rating: 1H
Salomon Smith Barney ~ December 20, 1999
12/20/99 JDS Uniphase (JDSU $240.94,1-H,Tgt $320.00) Lissa Bogaty
--SUMMARY:--JDS Uniphase--Connectors & Other Components
*We are raising our 12-month price target on JDSU to $320 from $210 by
rolling over the current multiple on 2000 earnings (about 150x) to our
calendar 2001 estimate of $2.13.
*In doing so, we are agreeing with the market's valuation, i.e., about a
50% premium to the growth rate, based on the strong fundamentals that show
every sign of continuing.
*The OCLI results, if the growth has continued into December, suggest that
JDS Uniphase's filter business continues to be up 2x-3x, and we have no
reason to believe that the other businesses have decelerated, so we expect
a slightly better-than-expected quarter.
12/20/99 JDS Uniphase (JDSU $240.94,1-H,Tgt $320.00) Lissa Bogaty
--EARNINGS PER SHARE--------------------------------------------------------
FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year
Actual 06/99 EPS $0.14A $0.16A $0.19A $0.24A $0.74A
Previous 06/00 EPS $0.29A $0.31E $0.34E $0.36E $1.30E
Current 06/00 EPS $0.29A $0.31E $0.34E $0.36E $1.30E
Previous 06/01 EPS $0.39E $0.44E $0.48E $0.52E $1.83E
Current 06/01 EPS $0.39E $0.44E $0.48E $0.52E $1.83E
Previous 06/02 EPS $N/A $N/A $N/A $N/A $2.50E
Current 06/02 EPS $N/A $N/A $N/A $N/A $2.50E
Footnotes:
12/20/99 JDS Uniphase (JDSU $240.94,1-H,Tgt $320.00) Lissa Bogaty
--FUNDAMENTALS--------------------------------------------------------------
Current Rank........:1H Prior:No Change Price (12/17/99)....:$240.94
P/E Ratio 06/00.....:185.3x Target Price..:$320.00 Prior:210.00
P/E Ratio 06/01.....:131.7x Proj.5yr EPS Grth...:50.0%
Return on Eqty 99...:N/A% Book Value/Shr(99)..:23.87
LT Debt-to-Capital(a)0% Dividend............:$N/A
Revenue (00)........:1134.10mil Yield...............:N/A%
Shares Outstanding..:179.5mil Convertible.........:No
Mkt. Capitalization.:43248.7mil Hedge Clause(s).....:
Comments............:(a) Data as of the most recently reported quarter.
Comments............:
12/20/99 JDS Uniphase (JDSU $240.94,1-H,Tgt $320.00)
--OPINION:------------------------------------------------------------------
RAISING TARGET TO $320 FROM $210
We are raising our price target on JDSU to reflect the recent
appreciation in the share price, reflecting the market's growing
acceptance of large premiums to growth rates for technology companies
with strong competitive positions in growing markets, particularly those
driven by the Internet. Consequently, we are rolling over the current
multiple on our calendar 2000 estimate of $1.52 to our calendar 2001
estimate of $2.13 and coming up with a $320 12-month price target. We
believe that the fundamentals at JDS Uniphase remain outstanding.
As stated above, the OCLI results, if the growth has continued into
December, suggest a strong quarter. In addition, we have heard from
several sources that components for the Lucent WaveStar are seeing strong
orders this quarter, from which we believe we can conclude that JDS
Uniphase's amplifier business must be strong. The problem we are having
analyzing all of this is the company's growing reluctance to offer us
even ball-park sizes for broad product groups. This makes doing a
thorough analysis virtually impossible. If we estimate that the filter
business accounts for at least 35% of revenues, up nearly 3x this
quarter, then if the remaining businesses are up greater than 60%, the
company should be able to exceed the Street's estimate. And these
remaining businesses include an amplifier business that is likely nearly
a third of revenues, yet insignificant last year, so should be
experiencing extremely strong growth. Based on all of this, we believe
we could see at least $0.02 upside to the quarter, and as much as $0.05.
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