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Technology Stocks : All About Sun Microsystems
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To: Charles Tutt who wrote (34629)8/23/2000 3:38:12 PM
From: Lynn  Read Replies (1) of 64865
 
OT Dear Charles: CPN is not one's normal, traditional (boring) utility as I found out when I did some digging.

ML initiated coverage of CPN on Aug. 14th with a BUY/BUY. Their complete research report is amazingly positive. Here is the summary published in their Morning Notes the same day:

From ML's Morning Notes:

Calpine Corporation (CPN; $82 1/64; C-1-1-9)

Generating Power and "Sizzling" Returns (Bulletin Available) 00E $1.65; 01E $1.95; Market Cap.: $11,432mn

 Single-best investment play on the deregulation of power generation and need to rebuild U.S. power infrastructure, in our view. This industry segment is
currently experiencing very favorable market dynamics. Adding stock to our summer “sizzle” basket.
 Company is in the “sweet spot” of growing demand, inadequate supply and rising power prices in key regions (California, Northeast, Texas) where it has been an early entrant. Such conditions are likely to continue for at least the next 18 months.
 Our earnings ests of $1.65 / $1.95 / $2.80 for 2000 / 2001 /2002 are above consensus ests of $1.47 / $1.83 / $2.52.
 At 42x our 2001 est, the stock is priced at a 40% premium to its projected long-term earnings growth rate of at least 30%. High-growth companies such as CPN warrant such
a premium or better; our price targets of $100 (9-12 mos; up 22%) and $140 (24 mos; up 71%) conservatively assume no P/E multiple expansion.
 Stock is a reasonable candidate for inclusion in S&P 500 (market cap $11.4 billion), perhaps when other power company names drop out as pending mergers close.
(E. Parrella/S. Fleishman)

Regards,

Lynn
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