CSFB on KEM
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KEMET Corp. (KEM-$26.00-Cap $2.3B-Buy)
Earnings Exceed Expectations – Growth Will Slow, is it in the Price of the Stock FY01E: $4.18 , FY02E: $4.31
· We are raising our FY’01 EPS and FY’02 EPS estimates to $4.18 and $4.31 from $3.75 and $4.25, respectively. We continue to rate Kemet shares “buy” with a twelve-month target price of $35, up 35% from current levels.
· KEM reported 2Q’00 EPS of $1.08, substantially exceeding our estimate of $0.92, First Call’s consensus of $0.94 and year-ago levels of $0.11 per share.
· KEM sales, margins and earnings in the September quarter were well above expectations; however, current levels of profitability are not sustainable, particularly with rising tantalum powder prices, and we expect relatively flat sequential quarters for the remainder of FY01 and flat year to year in FY02.
· Nevertheless, we still believe 6 times CY2001 ignores the high levels of earnings and cash flow at Kemet. |
