Susan - MACR
Macromedia (MACR) 20.52 -0.48: Looking for a turnaround candidate? If yes, then Briefing.com suggests taking a look at Macromedia... Leading Web design and software maker has seen its stock collapse over the past, falling from a high of 120.875 last July to a low of 13.375 in early April.... The stock rallied sharply off its low only to get whacked again when it reported disappointing fiscal Q4 earnings (33% below expectations) earlier this month... Almost as troubling to the street as the five cent miss was the company's refusal to give forward guidance... Several analysts immediately took this as a very negative sign and quickly downgraded their ratings and cut their earnings estimates... Though the lack of guidance is a bit worrisome, Briefing.com contends that the street overreacted... With the Fed aggressively cutting interest rates, traders are becoming increasingly optimistic that the economy will rebound beginning late this year... More and more tech companies are also suggesting that earnings will trough in Q2 or Q3 of this year... As the economy and earnings pictures improve, so will the forward outlook for Macromedia... In other words, MACR may suffer through another difficult quarter or two, but by then the outlook for the company should improve significantly... Softer comparisons in the out quarters won't hurt any either... Neither will fact that 11 of the 15 analysts surveyed by First Call currently rate the stock a HOLD -- leaves plenty of room for upgrades once business conditions begin to improve... Playing the turnaround game takes patience, as these stocks are depressed for a reason... Fortunately, Briefing.com sees nothing fundamentally wrong with MACR that a healthier economy won't fix... So if you are willing to assume a high degree of risk for a potentially high rate of return, then MACR might be worthy of consideration... The stock trades at 23.9x and 16.2x consensus FY02 and FY03 earnings of $0.86 and $1.27, with a p/s ratio (based on trailing 12-month sales) of 3.0... Technically, stock recently moved back above its 50-day moving average... Initial resistance is in the 25-27 range.-- Robert Walberg, Briefing.com |
