Margureite, your explanation sounds reasonable, but the only way to find out for sure is to call Avid IR and ask them for a breakdown. As I'm not a shareholder presently, it isn't worth my time to pursue this detail, but it might be for you to do so.
Congrats for picking Avid up at book a few months ago. Nice ride up, eh? I admire your courage to stay with it as Avid continues to grow even more overvalued IMHO. With 7 analysts estimating a range between .25 and .72 earnings for FY97, that's a PE ranging from of 32 to 85, depending on who you believe. Even the median estimate of .56 yields a PE of 41. And with FY98 at a median estimate of .99, a PE of 23 is barely warranted for a company that is projected to grow at 20% per year, yet has seen a decline in sales for the past 3 consecutive quarters. Also, with a PEG of 1.96, that's double fair-value if you assume a growth rate of 20% going forward.
All this excitement over the Intel alliance and the recent return to profitability of $0.08/share! I believe this is the kind of over exhuberance I warned about just before the '95 crash of this issue when both the stock price and the PE peaked at around 46. Back then, Avid practically had the NLE market to itself; today things are very different, with dozens of viable competitors all nipping at its heals. Surely, AVID momentum players will jump ship in a hurry at the first sign of trouble after a runup this far and fast. I'll believe in this company's prospects as a high-flyer again when I see a quarterly increase in both revenues AND sales greater than 20%, like in the old days. My advice is to at least place your stop-loss now so you'll be protected from the potential downside risk.
Am I missing something here?
D. Kuspa
As always, do your own research! |
