EFNT's secondary is putting pressure on the stock.
Okay, a couple clips from Chase H&Q on ADI's earnings:
. . . Trading at 31x our revised CY01E estimate of $2.45. ADI is trading at a substantial discount compared to other high-performance analog competitors like Texas Instruments, trading at 40x, and Linear Tech, trading at 52x. Additionally, ADI's CY01E P/E multiple-to-growth (PEG) ratio is at less than 1.0 while LLTC and TXN are at 2.6 and 1.4 respectively. As the market gains comfort with the cycle and disassociates ADI with wireless handsets, we believe the market is likely to assign a higher multiple. Accordingly, our CY01E EPS of $2.45 and a P/E and a multiple of 45x, conservatively puts ADI stock at $110, roughly in line with TXN's and LLTC's CY01E PE multiples.
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Higher target model introduced for the second quarter in a row. Management guided revenues to $785-$800 million in Q4, up 12% - 14% sequentially, and EPS in the range of $0.49 - $0.50. Clearly, this revenue guidance is conservative, given the fact that a substantial portion of forecasted October revenue is currently in backlog and the company has partial visibility leading into FYQ1-01E (Jan-01E). In fact, management stated that ADI should enjoy year-over-year revenue growth rates of at least 45% in FY01E: (on top of 77% projected for FY00E). Importantly, management indicated the FY01E capex budget would fall in the range of $400-$500 million (up from $250+ million in FY00E and $78 million in FY99, highlighting the company's confidence in their bookings (up30%qoq) and demand outlook over the medium-term. Management also introduced a new margin model and raised medium-term operating margin guidance another 500 bps to 35% up from previous guidance of 30% (Note: ADI reported 31.3% in July - Q3). Management expects to attain higher operating margins through a combination of gross margin expansion and realization of operating leverage over the next several quarters. Our estimates assume an average operating margin of 29.7% in FY00E and 33.7% in FY01E (vs 16.7% in FY99). |
