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Technology Stocks : How high will Microsoft fly?
MSFT 462.68+2.6%10:28 AM EST
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To: Matthew G Buetow who wrote (2118)7/17/1997 5:18:00 PM
From: Dan Woodbury   of 74651
 
Why is it that people think MSFT is fairly valued at a PE of 60 when even during this phenomenal year profits only grew 55% and the company continues to warn that revenue growth and profit growth will be lower next year? Sure, MSFT is probably the best bet out there for continued growth - but at 30% year to year, not 50%. The stock price has outrun fundamentals so much in the past month that a drop into the 130s would not surprise me a bit. In fact, the stock could easily move back to 120 and not be oversold.

Another way of looking at it is to predict what the upside of MSFT is over the next 12 months. I say the upside is $180 which would yield an approximate 20% gain from todays closing price. The only way MSFT goes much higher is if they come out with another killer app this year - and upgrades to Windows95 and WindowsNT are just that, upgrades.

Of course, helping MSFT is the fact that everyone wants to own it so there will be plenty of support in the 130-145 range.
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