Herschel and Dan,
Sorry for the late response, it was a busy day :-)
I completely disagree with that analyst's conclusions, but may I play the devil's advocate for a while.
I would start by saying that the bigger malpractice was when all analysts were shouting "buy" and giving inter galactic targets for AUDC (and its peers in the telecom equipment market) six months ago when AUDC was trading for over $40. At that time the strain on the markets financing the telecom capex frenzy was apparent, but ALL analysts chose to look the other way. Targets of $70-100 were the norm, if my memory serves me right, and all buy recommendations. They were all dead wrong, plain stupid or worse. They were sheep, but the ones that took their advice were slaughtered.
Second, in defense of the Prudential analyst I have to say that the lowered target he or she gave with the January downgrade ($21) was proven quite accurate for that time.
Of course my target ($22 before the end of Q) was closer.
Message 15150752
AUDC shares traded for $25 three weeks later.
Now I really don't try to judge the reasons behind the recent downgrade, but I do agree that this is a very bad wake up and smell the coffee kind of work. A $4.5 target NOW is as bad as the $70 target of October 2000. Hey, it's the same company six months later, and it is still the leader in a VERY good market and it still is cash positive from operations regardless of the $140 Million stash it has.
Maybe we got ourselves a very good contrary indicator for AUDC. I guess there are many analysts like that wether there is a hidden agenda or not (CIBC recommendations were a great contrary indicator for FLSH for many years - as long as they kept their strong buy recommendation the stock went down, and just after they downgraded to hold the stock began to climb. They kept their "hold" rating all the way when the stock skyrocketed from $4 to $80 in under 10 months, and then the ceased covering it).
My own opinion is that AUDC is one of the best LT plays in the market and it's worth $11 today, not next year. Based on the drop in price from 9$ to $7 since my latest consideration Message 15567082
I'm upgrading my recommendation from "accumulate" to "buy".
This is already long and it WAS a busy day so please excuse me that the full report will have to wait for another post.
Good trading
ATG |
