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Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..]
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To: gruetz who wrote (1040)2/8/2000 9:54:00 AM
From: SteveG  Read Replies (1) of 1860
 
John Bauer popped up last week at Ladenburg Thalman. He is out this AM on TGNT: We are maintaining our HOLD rating on Teligent (a national Wireless CLEC). Our 12-month target price of $80 per share
reflects a 30% public market discount to year-end 2000 Net Asset Value (NAV) of $114. Key points:
Yesterday TGNT spiked 9 points on no news.
q We spoke with management last night and failed to discover any new news at the company.
q It's possible investors believe TGNT's estimated NAV is about to be raised but we see no catalyst.
“Fundamentally” the stock looks rich.
q TGNT is now trading above our year-end target price of $80.
q The stock's public market discount currently approximates 24%.
q Historically TGNT shares have peaked at a 30% - 35% discount to our NAV estimate.
q Over the last two years, TGNT shares have peaked at this level 8 times.
q The current “skinny” discount is extremely rare.
q Over the last 2 years TGNT has attained this robust valuation only twice.
q In each case the stock quickly pulled back to a more sustainable valuation level.
q Given the current rich valuation we suspect we're in for a pullback.
“Technically” the stock looks poised for a pullback.
q TGNT is one of the most volatile CLECs in our universe – prone to dramatic run-ups and pullbacks.
q Over the past year TGNT shares have posted 14 unprovoked price surges of 18% or better.
q The “average” price surge has taken the stock up 27% in 6 days.
q The average pullback has shaved about 18% off the stock's high.
q Over the last 5 days TGNT has advanced 30%.
q We suspect we're in for another pullback.
Assuming no increase to our NAV over the near term – downside could exceed 30%.
q Historically TGNT shares have bottomed at a 50% or so discount to our NAV estimate.
q Over then past 2 years the stock has done so 7 times.
q A 50% discount to our year-end 2000 NAV estimate of $114 per share would put the stock at $57.
q This translates into a downside potential of roughly 31%.

RATINGS HISTORY:
TGNT shares have historically peaked at a 30% - 35% discount to our NAV estimate.
q On January 20, we launched coverage of TGNT with a HOLD rating.
q At $72 5/8 the stock was trading at a 35% discount to our year-end 2000 NAV of $114.
q Our initiating coverage report noted that TGNT has peaked 8 times over the last 2 years.
q These peaks occurred when TGNT's public market discount narrowed to the 30%-35% range.
q Given this history, the upside on the stock (at a 30% public market discount to our 2000 NAV) was less than 10%.
q Within 4 days the stock has pulled back to $65 ¾ and its public market discount had widened to 42%.
TGNT shares have historically bottomed at a 50% discount to our NAV estimate.
q On January 25, we noted that TGNT's public market discount approximated 42%.
q We noted that historically the stock has bottomed at a 50% or so public market discount.
q Given this history, the downside on TGNT was less than 12% (and the upside more than 21%)
q Within 10 trading days the stock had advanced to $87.

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