Jeff & Ron
I just read/hear the news on ANAD on CNBC and here is my take:
ANAD will have a shortfall for the 4th qrt because of one supplier. thus if this is a temporary problem(one qrt only) then this price drop is an overreaction.
EPS will decrease 35% from current estimates means $0.14 vs the est of $0.21. its a drop from 0.21 last qrt, BUT thats still 40% EPS growth from the same qrt last year.
I think its a buying opp for two reasons: short term (1 qrt) problem, since the company has pre-warning the bad news will hit now and by the earnings date there won't be the shock of the news. EPS for next year, according to the company, are still on track so @ $1.10 next year a price of $30 has a PE of ~27, dirt cheap for a tech company with 40% earnings growth.
what happens now? well, stock going down, probably bounce then go back down a bit. technically stock has had a base price support level ~22-23. 52 week low ~18.
is there a trade here? YES. I'm going to lowball an entry price and then wait. I would not be surprised to see the stock recover by earning date because the numbers could always be a bit better. look for a downgrade on this, but the stock will already factored that in.
"While the Company anticipates a record third quarter 2000 in revenue and EPS, it noted that its No. 1 wireless customer has recently formally notified its suppliers, including ANADIGICS, that difficulties with component supply due to a fire at a supplier's factory earlier this year has caused it to reduce production and forced it to balance stock levels by rescheduling and in some cases canceling purchase orders with its suppliers. Consequently, ANADIGICS anticipates a total sequential revenue shortfall of 30% - 35% from a third quarter revenue target of approximately $51 million, which will result in a substantial reduction in fourth quarter earnings from the third quarter.
``The outlook for 2001 continues to be strong with anticipated year-over-year growth in excess of 50%,'' remarks Dr. Bami Bastani, President & CEO of ANADIGICS. ``We expect the inventory corrections to be completed by the end of this year and anticipate a return to double-digit sequential revenue and earnings growth in the first quarter 2001. |
