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Doug, I don't think AVID will be heading that far down ($9.50) any time soon, unless they announce another loss or some other bad news comes out. AVID is fairly valued at around $12 if you give the company a PE of 20 based on the projected 5-year growth of 20% and 1997 earnings of $0.61. If you believe the current FY98 earnings projection of $1.05 (I don't--you can see my previous posts; a lot can and will happen in this rapidly changing, competitive market between now and then), fair value would be more like $21 with a PE of 20. Perhaps someone else has done a more thorough fundamental analysis and can respond.
Earnings are due week of July 24th, and according to First Call, the mean estimate is for $0.11/share. It's hard to predict where AVID will go since IMO the dramatic run up has been fueled by the Intel investment and momentum investors. Since the PE and PEG are so high, I have to think that the current price level is based on the belief that they will beat earnings estimates, so I think it's more likely that earnings will be seen as a disappointment unless they post a fantastic quarter. I don't think anyone in the nonlinear editing market has bragged about their NAB sales, including AVID. If they miss this earnings estimate, watch out. FYI, According to Market Guide, short interest has picked up slightly this month to .73M shares vs. .67M shares sold short last month. Institutional ownership is up slightly, with purchases up .4M over sales.
As always, do your own research,
D. Kuspa |
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