Received this from my broker today:
JOHN C. DEAN
ADIC: Initiating Coverage with a 2H rating and $22 Target Price
Advanced Digital Information Company (ADIC)
ADIC: Initiating Coverage with a 2H rating and $22 2H (Outperform, High Risk)
Target Price Mkt Cap: $1,209.3 mil.
June 5, 2001 SUMMARY
* We are initiating coverage on this leading tape
DATA STORAGE automation vendor with an Outperform (2H) rating and a $22
INFRASTRUCTURE price target.
John C. Dean * ADIC entered 3FQ01 on a wave of momentum from share gains
in 2000, an upcoming new product, the addition and
extension of channel relationships, and acquisition of
Scott McBride significant technology via the Pathlight acquisition.
* We are forecasting revenue growth of 39% in FY01 and 35%
in FY02, driven largely by strong OEM relationships and new
product introductions.
* EPS should grow 2% in FY01 and 49% in FY02. Flattish
FY01 EPS reflects costs of developing new technology
acquired with Pathlight and gross margin pressure from
competition and a product mix shift.
* ADIC is a technology agnostic play in the growing market
to store, manage, and retrieve data. We believe the
company is well-positioned to take advantage of the
frenzied growth of SAN/NAS.
FUNDAMENTALS
P/E (10/01E) 41.2x
P/E (10/02E) 27.7x
TEV/EBITDA (10/01E) 28.0x
TEV/EBITDA (10/02E) NA
Book Value/Share (10/01E) $5.41
Price/Book Value 3.6x
Dividend/Yield (10/01E) NA/NA
Revenue (10/01E) $400.3 mil.
Proj. Long-Term EPS Growth 20%
ROE (10/01E) 8.3%
Long-Term Debt to Capital(a) 0.3%
(a) Data as of most recent quarter
SHARE DATA RECOMMENDATION
Price (6/5/01) $19.38 Current Rating 2H
52-Week Range $11.13-$28.25 Prior Rating NA
Shares Outstanding(a) 62.4 mil. Current Target Price $22.00
Convertible No Previous Target Price NA
EARNINGS PER SHARE
FY ends 1Q 2Q 3Q 4Q Full Year
Previous NA NA NA NA NA
Previous NA NA NA NA NA
Previous NA NA NA NA NA
First Call Consensus EPS: 10/01E NA; 10/02E NA; 10/03E NA
Calendar Year EPS: 12/00A $0.47; 12/01E $0.50; 12/02E $0.74; 12/03E NA
EXECUTIVE SUMMARY
ADIC, a leading tape automation player, is entering the current quarter on a
wave of momentum from share gains in 2000, upcoming product introductions,
the addition and extension of channel relationships, and the attainment of
significant technology from an acquisition -- Pathlight (see section on
acquisition) -- that closed in early May.
We believe the following are the key investment themes associated with ADIC:
* Tape automation, used in the backup and archiving of data for disaster
recovery and business continuity, is clearly benefiting from the growth in
data and its need to be managed, protected, and stored. We believe the
recent introduction and renewed product roadmap of tape drive technologies
are helping to spur added demand as customers are enthusiastic about tape
drives backed by such vendors as Hewlett Packard, IBM, Quantum, Seagate,
and Sony.
* We have projected that ADIC's revenues will grow by 39% and 35% year-over-
year in FY01 and FY02. Earnings should rise by 49% in FY02 after a flat
FY01 due to Pathlight, together with a product mix shift that will lead to
a narrower gross margin. We expect sales will be driven by ADIC's OEM
relationships, and the introduction of a high-end library, which fills a
void in ADIC's product portfolio. We believe EPS growth will resume in |
