JUST 8 DAYS AGO THE CROOKS AT WELLS FARGO GAVE THIS STOCK A STRONG BUY RATING!!!!
Wells Fargo Securities Initiating Coverage on Riverstone Networks, Inc. With Strong Buy Rating
SAN FRANCISCO, Feb 20, 2002 /PRNewswire-FirstCall via COMTEX/ -- Chet White, networking/communications analyst at Wells Fargo Securities, has initiated coverage on the shares of Riverstone Networks, Inc. (Nasdaq: RSTN chart, msgs) with a Strong Buy rating and a 12-month price target of $16.50.
Below are direct quotations from Mr. White's research report:
-- After a lengthy overbuild cycle in the long-haul markets, we believe
that alleviating metro area congestion and building out cost-effective
edge data services is the top priority of carriers and service
providers worldwide. In our opinion, Riverstone's exclusive focus on
the metropolitan area network (MAN) and its industry-leading
metro-switch routing offering should enable the company to continue
taking market share and grow its revenue a rate above its competitors.
-- As Riverstone benefits from the bottleneck in the MAN and the growing
demand for edge data services, we expect revenue to grow at rates of
127% and 34% in FY02 and FY03, respectively. Our FY02 and FY03 EPS
estimates are $0.00 and $0.28, respectively, up from ($0.35) in FY01.
We believe that Riverstone can sustain a sales and earnings growth rate
of 35%+ for the next 3-5 years.
-- In our opinion, the recent weakness in the stock price over concerns of
domestic incumbent carriers and service providers reducing their CAPX
estimates is already reflected in our model and in Riverstone's current
trading multiple. Therefore, we suggest that investors take advantage
of this near-term price weakness and purchase shares of Riverstone
Networks at these lower levels.
-- Considering Riverstone's singular focus on the metro area and the
41% expected CAGR of this market, we believe that shares of Riverstone
could trade at a P/S/R of 8-10x, which represents the peak of the
historical trading range for the sector. Based on Riverstone's superior
performance and expected market share gains, we believe that the
company deserves to trade at a premium. Thus, after applying a P/S/R of
8x to our FY03 revenue estimate of $299.7 million, we derive a 12-month
price target of $16.50.
Wells Fargo Securities makes a market in the shares of Riverstone Networks, Inc. |
