Electronic Contract Manufacture (ECM) Sector Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: kolo55 who wrote ()	5/5/2000 10:26:00 AM
From: Marsha Landau	of 2542

SLR is Merrill Lynch "Focus 1 Stock" 12 Month Price Objective: $60 Estimates (Aug) 1999A 2000E 2001E EPS: $0.61 $0.82-0.86 $1.12-1.20 P/E: 57.0x 41.4x 30.0x EPS Change (YoY): 37.7% 35.7% Consensus EPS: $0.85 $1.13 (First Call: 13-Apr-2000) Q3 EPS (May): $0.16 $0.20 Cash Flow/Share: $0.92 $1.26 $1.61 Price/Cash Flow: 37.8x 20.9x 21.6x ... Est. 5 Year EPS Growth: 30.0% ... Investment Highlights: - We are adding Solectron to our Focus 1 list. - Based on a P/E multiple of 52X our new F2001 EPS estimate of $1.16, our 12-month price objective is $60. Fundamental Highlights: - Solectron remains a core technology holding and the stock's almost 30% decline from its high in early April provides investors with an attractive buying opportunity. - We think investors have overreacted to Solectron's conference call earlier this week that indicated the component environment and the delay in closing the Nortel asset acquisition could affect Q3:2000 (May) results. - We believe the EMS industry is the second-fastest growing industry in the world (next to the Internet), and Solectron's global manufacturing infrastructure and financial strength is truly a competitive advantage that should help the company gain market share in years to come. - Taking into account the $2 billion convertible, we are maintaining our F2000 (May) EPS estimate of $0.84 (+36%) and increasing our F2001 EPS estimate by $0.02 to $1.16 (+39%). ... ... In our opinion, Solectron is the most financially sound EMS provider in the world with about $1.5 billion of cash on its balance sheet (excluding the recent $2 billion LYON TM offering). This positions Solectron to capitalize on the fertile OEM asset divestiture environment. For example, Solectron's preemptive move to purchase the entire second tranche of Nortel facilities for $900 million provided the company with a $10 billion four-year outsourcing agreement. Other large OEM asset purchase opportunities with companies such as Lucent Technologies await the industry and the well financed EMS providers such as Solectron are best positioned to capture some of this business. ... The changing dynamics of the EMS industry continue to favor MEGA-EMS Providers such as Solectron that have a global manufacturing infrastructure, top-tier customer relationships and strong financials. Historically, Solectron has sold at a premium valuation to its competitors but trades at a 5% discount today. We continue to think that Solectron deserves a premium valuation to our EMS Universe and more in-line with some of the marquee technology OEMs (74x C2000E EPS) in our OEM Tech Barometer (58x C2000E EPS). Based on a P/E multiple of 52X F2001 EPS estimate of $1.16, our 12-month price objective is $60.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next