Amy, RE: Harry, on your analysis, what do you conclude is a reasonable price if Intel achieves a growth rate of 35% in 2000, followed by say 35% in 2001? Then 25% in 2002, then 20% 2003? Just wild guesses here, but I bet Intel will be above 20% growth in 2000. I think the analysts could be wrong on their estimates for 2000, given Craig Barrett's recent comments in that article.
That's a highly optimistic scenario, as you well know, although you guess that analysts are wrong on 2000 is pretty well acknowledged by most everyone, including the analysts. If Intel achieves those growth rates, then the company will earn $6.38 in 2003. If you further assume a 15% long term growth rate at that point (also pretty optimistic), then figure that the increased size has given Intel a lot more ability to produce more predictable returns, a PEG of 3x is possible, leading to a PE of 45, or a stock price of $287 in 2003. Discount that back at whatever fair rate you like. If you discount that back at 15%, a reasonable price today is $204. |
