ZH,
Thanks for the correction. That makes a big difference.
On the plus side, JDSU is trading at less than 4 times sales. Also, since April 24 there have been eight analyst downgrades to only one upgrade. These downgrades all occurred after JDSU had already lost 80%-90% of its value from its highs. To me, when analysts issue downgrades after a long downtrend, that is merely an attempt to shake out the last of the retail designated bag-holders, and suggests that the big boys are either accumulating right now, or soon will be. Don't forget, many of these same analysts were upgrading JDSU during the spring of 2000 as it was reaching its peak, which I take to be an attempt to sucker in the last of the retailers into the ever-popular buy high, sell low game.
My guess is that you will see further moans and groans from analysts bewailing the layoffs and downgraded forward earnings projections, but I suspect the market has already discounted these, and they are more than reflected in JDSU's current stock price. I'll even go out on a limb with a prediction, because this is such a well-oiled game, and JDSU is starting to look like a duck, and quack like a duck:
One day not far off, perhaps this summer, perhaps early in the fall earnings season, JDSU will out of the blue gap up hard on very strong volume (i.e., professional gap) and not look back. This will be unexplainable by earnings or news or anything close to rational, but talking heads will find some way to explain it post-hoc anyway, as they always do, however unconvincingly. But nobody will see it coming, except perhaps the analysts---who will issue one final spate of downgrades in a last-ditch effort to get the retailers to give up the ghost and sell the shares they were advised to purchase when JDSU was trading at $125-$150---so their real clients, who sold them the shares in the first place thereby booking a tremendous profit, can snap them up again at fire-sale prices.
And the wheel just keeps turnin'.
But, JMVHO as always......YMMV
Walkingshadow |
