KBRO reiterates $65 target....NEWS!!!
by: turboconnect 9/13/00 10:43 pm
messages.yahoo.com
Msg: 23950 of 23955
Wrapup of Roadshow - STRONG BUY Sept. 13, 2000
KBRO ACTIONALERT issued 9/13/00
cgray@kbro.com Date of Last Report: July 20, 2000 www.kbro.com
KBRO Trading Desk: 1-800-807-8723
WESTELL TECHNOLOGIES, INC.
(WSTL /NASDAQ)
CURRENT PRICE: $15 1/8 PRICE TARGET: $65
NOTES FROM THE WESTELL ROADSHOW
Westell management was on the road today and yesterday marketing with buy-side accounts.
Company reiterates its guidance for the current quarter. During meetings, the company reiterated its guidance for the current quarter, which includes CPE revenues of $65-70 million and EPS of $0.09.
Verizon strike has no impact. During the quarter, the strike at Verizon (VZ $43 13/16) had little impact on orders to Westell. In particular, only one of the five units needed to provision DSL - the central office technicians - are unionized and actually went on strike. In addition, the company has started to see traction in the GTE footprint of Verizon, an account that was recently won as Verizon looked to standardize its architecture across all territories.
Slowdown at SBC will have affect, but downside limited. The company did acknowledge the fact that the slowdown at SBC Communications (SBC $45 1/2) will have an affect on orders, but did say that this was not so large that other business could not make up for lost revenues.
Orders from British Telecom ahead of schedule. The company has also seen significant traction at the British Telecom (BTY $114 15/16) account selling both DSLAMs and CPE to the U.K. operator. Our estimate calls for $15 million in transport revenues, a sequential increase of over 150% from the roughly $6 million in transport last quarter.
We reiterate our STRONG BUY rating and our $65 price target.
INVESTMENT CONCLUSION
Shares of Westell, along with its peers, have come under significant pressure lately as investors have become increasingly skittish about DSL deployments. Of particular concern, the slowdown at SBC will have limited impact on companies like Westell. Despite this slowdown, however we remain bullish on shares of Westell, particularly at current levels. The company’s shares are trading at about 21x our 2001 calendar year EPS estimate, off over 60% from the 52-week high. The company will likely have a managed quarter and should enter the December period with strong backlog and visibility. We believe the current valuation is quite compelling and recommend investors buy stock ahead of a strong visibility into the fourth quarter. We continue with our STRONG BUY rating and $65 price target.
kbroresearch.com
A Buying Opportunity,
Michael |
