Using our pathetic Prudential Analyst Randy Scherago's own numbers, he's expecting 22c per share earnings for 2001 and his price target is $4.50, meaning he expects AUDC will command a PE of 20 when it hits that price target at or after the end of 2001 (analyst price targets are implicitly for a 12 month forward period). This is just at a time when most pundits are saying "the big turnaround" will be happening.
And, at that time, VoIP will only a be much bigger business than it is now, the tech inventory correction will have run its course, telecom capex spending will improve as Greenspan's interest rate reductions will improve their access to capital. And AUDC will have had a year to roll out more new products and partnerships and sales.
Note that in the recent difficult December quarter, AUDC showed that they could grow revenues 130% and earnings 150% quarter over quarter. Suppose if AUDC's earnings growth drops to 60% annualized, then AUDC would support a PE of 60 or $13.20, but that is excluding the possibility of mega-deal announcements that AUDC may be working on which can change the whole landscape overnight.
Even if the capex spending slowdown continues (which may be already priced in to many stocks like AUDC), a company with growth rates like AUDC, profitability, and healthy balance sheet, doesn't deserve a PE of 20.
AUDC has $3.50 Book Value ($149.7M Total Shareholder's Equity / 43M shares out a/o Dec 31, 2000):
biz.yahoo.com
So Prudential's hapless analyst is giving AUDC $1.00 per share for the business, patents, partnerships, customer base, not to mention AUDC's outstanding growth prospects in a key emerging technology (VoIP)!!
He's a weenie.
If he believes in his recommendation he would be shorting the hell out of AUDC and in recent days including today, yet PRUS has been conspicuously absent on the sell-side on Level II.
Make that a slick weenie... |
