Now that we have a rather uneventful day on LPTH. . . I wanted to take a second to review. . .
When we first began our accumulation near $7, we calculated that the stock needed to reach about $105 to get a $1 billion market cap. We thought that a billion was a good target for the stock.
Since then, the company has better defined itself. We've seen them expand production in a number of ways to keep up with demand. We've heard that they have major customers like Corning. We watched them expand their management, leaning heavily on Lucent for its employee pool. We've watched as the former AMP CEO, Rupp, gradually and successfully expands the business.
With what has been defined in recent months, we could up our target some. I'm not the one to put a target price on it. . .but I could accept it being upgraded somewhat from the $1 billion market cap target mark for buyout over the next year.
Now. . . the part that bothers me is that with all the warrants, units, etc. the company recently converted, the stock has been diluted quite a bit. At $43 per share, the stock is showing an $823 million market cap. This means that the stock needs only get to just over $50 to get its $1 billion market cap full target. . . instead of the $105 that we calculated back in the autumn.
Where we were only about 40% of the way to that 1 billion mkt cap mark when we started. Now we are over 80% of the way there. So from the $43 dollar level we are at now, LPTH appears to be more fairly valued from a mkt cap standpoint than the price reflects. In other words, the company benefited by the dilution, while the investors have lost shareholder value during the same period. . . as the stock traded back and forth from about $30 to $50.
So the question is this. . . which way do we go from here? If I were to grab a number from the air today, I'd say that based on the market capitalization of many fibre optic/optical broadband sector issues. . . LPTH could see $1.5 billion mkt cap. . .or $75 per share before someone scarfs them up. . . unless CSCO does so on Monday. . .<G> ,
HOWEVER, at this point in time I feel the stock is already fairly valued. . . based on the anticipation of the market selloff into the August FOMC meeting. I'd be looking to gobble up shares each time it approaches the mid 30's. . . and would be lightening the load whenever it nears $50. . . until we get a REAL summer RALLY. . . which requires getting "AL" involved. . . at which time, I could expect the entire optical broadband sector to make another significant move higher. . . which could send LPTH to new highs.
I am sorry if this post is confusing. . . but the market is highly volatile and sector moves are dependent heavily upon market sentiment. . . and LPTH moves with the optical broadband and fibre optics sectors. . . so any discussion of where it might be on a certain day, needs to consider where the markets will be.
This post should have no effect whatsoever on LPTH. . . as it is from a neutral perspective. . . .please do your own DD and make your own decisions based on your DD and not what I or anyone else TELLS you.
Rande Is |
