Dale,
Re: <I'd be the first to admit that there was some "irrational exuberance" in this market, but not a lot of it was in the semi-equip sector. A few of them got a ahead of themselves before their earnings justified it, and ASYT may have been one of them.
That said, we all know that they certainly didn't deserve the pounding they received when they started delivering stellar earnings.>
I whole-heartedly concur. Your statement prompted me to do a little review of the action here since the earnings release, after market close, on Wednesday, 19 July. For those of you who are bridge players (I used to play, but not for many years) I remember the phrase "Let's review the bidding". <gg>
Before we get into the earnings report, let's establish the baseline. On Tuesday, 18 July, ASYT closed at a recent high of 37.38. The next night, Wednesday, the stock closed down at 35.31, a loss of 5.5 percent ( it turns out that was a harbinger of things to come - but how would we know??). This year and next year earnings estimates were 1.77 and 2.26 respectively, giving a this year and next year PE of 21 and 16 respectively. Certainly not out of line considering the long term growth rate is pegged at about 26 percent. I know you recognize I am not making this up - this is the latest consensus data from the brokers (analysts) who are following the stock.
Now we have the announcement after hours on 7/19. I quote the first paragraph (keep in mind, the consensus estimate was 0.39 cents for the quarter)
<"FREMONT, Calif., Jul 19, 2000 (BUSINESS WIRE) -- Asyst Technologies, Inc. (NasdaqNM:ASYT), today reported financial results for its fiscal year 2001 first quarter ended June 30, 2000. Record sales for the quarter were $123.7 million, more than quadruple the sales of $27.1 million recorded for the comparable period in the prior fiscal year. Net income before amortization of acquired intangible assets was $17.4 million, or $0.49 per share. This compares to a net loss before amortization of acquired intangible assets reported in the first quarter of fiscal year 2000 of $2.5 million, or ($0.10) per share. All per share amounts are stated on a dilutive basis.>"
Now this announcement should be enough to warm the cockles of everyone's heart (even the analysts following the stock should be pleased, because after all, they were the ones who thought ASYT would make 0.39 per share). The stock raced ahead in after hours trading. Good times were here again - Right?? - Wrong!! On Thursday, 20 July, Needham & Co reduced their ranking from "Strong Buy" to "Buy"- cuts target from $67 to $46, and First Security Van Kasper reduced their ranking from "Strong Buy" to "Accumulate" - on recent price appreciation, maintains $45 price target.
On Thursday, 7/20, ASYT closed at 28.06, a loss of 21 percent for the day. Just 10 trading days later on Thursday, 8/3, the trading range ran from 16.94 to 20.38. Anyone could have bought the stock at 17 during the day. This is another reduction of 39 percent in 10 trading days. From the close on Wednesday, 7/19, the loss is 52 percent.
In the meantime - guess what?? - based on the good earnings report of 0.49 per share, the earnings estimates for this year and next year were raised. First they were raised to 1.85 and 2.39 almost immediately after the announcement (did that stop the price drop? - of course not!), then they raised the estimates to 2.16 and 2.76 on Thursday, 8/10, (if not slightly before) where the estimates presently reside. Where did the price close on Friday, 8/11? - at 17.55 (it traded as low at 16.88 during the day). Based on last Friday's closing price, this year and next year PEs were 8 and 6 respectively. Keep in mind, the consensus growth rate from the analysts is still at 26 percent.
Today, the price closed at 23.63 - a gain of 6.08 or 35 percent for the week. That's great everybody says! - well, I think it is great too, but 23.63 is still a long way from the close of 37.38 on Tuesday, 7/19. How far is that? - well, it is still over 58 percent. This year and next year PEs are presently 11 and 9 respectively with a long term growth rate of 26 percent.
With the present earnings estimates of 2.16 and 2.76, assuming we could get back to the PEs of 21 and 16 established on 18 July, the price would be in the 45 dollar range. That's nearly a 100 percent increase from where we closed today.
We still have a lot of room to run!!!
FWIW
Don W. |
