Thread: ML issued a new research bulletin for CPQ this morning titled, "COMPAQ COMPUTER:Solid Q2 - Raising EPS Estimates." I do not consider this a full-blown, new research _report_ because only a short term target (34) is given.
Here are some sections from the bulletin by Steven Fortuna and Michael Hillmeyer:
6 Month Price Objective: $34
Estimates (Dec) 1999A 2000E 2001E
EPS: $0.32 $1.05 $1.40
P/E: 87.7x 26.7x 20.0x
Investment Highlights:
Compaq reported solid 2Q00 operating EPS of
$0.21 and sales of $10.13 billion (up 7.5%), in-line
with both our estimates and the Street.
This represents a major improvement over the
1% yr/yr growth registered in the first
quarter, and should go a long way toward
building the new management team’s
confidence with the investment community.
We now have an even higher level of
conviction than before, that Compaq will be
able to achieve healthy, double-digit revenue
growth in the 16% range in the back half of
the year in tandem with further improvements
in commercial profitability.
As a result, we are modestly raising our
2000/2001 EPS estimates to $1.05/$1.40 from
$1.00/$1.35. The basis for our increase is
higher operating margin assumptions in Q3
and Q4, driven by mix shift as well as ongoing
cost cutting and solid demonstrated
operational execution.
Given what appears to be improving
momentum behind the numbers, we strongly
reiterate our Accumulate rating on Compaq
shares and set a price objective of $34, based
on 24x our new calendar 2001 EPS estimate of
$1.40.
[snip]
Importantly, we think there is a good chance the stock’s
multiple could expand to the 28x-30x range by fourth
quarter as investor sentiment continues to improve.
[end of ML bulletin]
Lynn |
