Re: Back when I first seriously started looking at NTAP,
Message 13746151
I thought they would make 0.60 in 2001, and I thought the Fed would engineer a soft landing, and I didn't see the impending cutbacks in IT spending, and I thought NTAP at 50 was a reasonable buy-in price. Re-reading it now, I realise I was hopelessly over-optimistic. Almost bought some, when they bounced repeatedly at 50.
Since then, the situation has changed a lot.
1. we are going to get a recession, and all valuations will get compressed. The higher the PE, the more the compression.
2. that recession is being led by a severe downturn in business capital spending.
3. The companies that sell into the same market, and to the same clients, that NTAP sells into, have all warned, and seen forward earnings estimates come down, sometimes drastically.
4. therefore, I think NTAP is likely to warn also. No reason (other than wishful thinking) to believe they are immune to macroeconomic or market trends.
So, a PE of 30 is a reasonable valuation.
But, stocks spend as much time below reasonable valuation as they do above reasonable valuation. Given that the Nasdaq is one year into the hangover from a 5-year binge of overvaluation, we could get some unreasonably low valuations, an overshoot on the downside as severe as the recent overshoot on the upside.
You mean that the stock could go up - or down? It is the same for me: I have no clue.
Regards,
a lurker |
