JP MORGAN for Cabot anytime!!!
Well since I didn't see anyone post the coverage post in full, I'll do it...This was from first call...Daniel Kunstler's recommendation
Iomega has caught an entire segment of the computer industry asleep at the switch -- We have seena boom in processor speed, a wholesale shift in emphasis toward multimedia, and rush hour traffic on the internet. However the most common media of removable storage, the floppy disk, is virtually the same as it was a decade ago. Iomega's zip has changed all that, and the company is well on its way toward owning the standard in removable media drives. The Zip has been a huge hit, with the Jaz high end product right at its heels. Since its introduction last year, over 2 million copies of the product have been sold. Nobody even comes close.
Iomega has the razor blades to go with its razors -- each drive that gets sold generates repeat sales of media catridges that should command gross margins of over 45%. A more typical disk drive business model ties sucess to superior execution in implementing commodity products. IOmega defies this model by proposing totally innovative products, pushing for ownership of a valuable new standard, and grafting a razor blade business atop a hardware business. Add to that a brilliant marketing ingriedient, and we get a pretty potent brew.
That the market is poised for strong growth is an understatement by any tally -- IDC estimates, prudently, that unit sales of zip-class drives will grow at a compound annual rate of more than 100% between now and 2000. The installed base of these drives should reach 90 million units and should promote robust shipments of high-margin media cartridges.
Iomega's valuation has balloned during the past year but its supported by strong prospects for long term earnings growth -- Given the company's market position, the zip should capture much of the annual grwth projected for its category of product. Our twelve month target price.....
Iomega Ready
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