"I have heard a lot about 60 as short term target (Briefing says it, Goldman recommends the stock, etc), but what do you (or anyone) see driving the stock up?"
The interesting thing to notice here about the stock is that the analyst are all raising their opinions on purchasing the stock, but lowering their estimates on earnings. This is an interesting phenomena, are these analysts setting this stock up for an explosive second half by setting the bar low? Most recomedations have been from hold ratings to moderate buy ratings. The company has indicated that revenue growth was going to be in the low double digits to the high single digits on a sequential basis going forward. 10% sequential quarterly growth puts year over year growth at 46.4%. The company may be low balling this figure by being conservative, and the analysts are appearantly taking their word for it. Analyst do not yet full trust the company, so they are hedging themselves with lower earnigns estimates and moderate ratings. If the company lives up to its promises of synergies from the Cascade merger and sequential quarterly earnings growth in the low double digits, then earnings surprises, strong buy recomendations, and upwards earnings revisions are what are going fuel this stock going forward. With small earnings surprises, we could easily see 1998 earnings revised upwards to $2.30 and trade at a 30 to 40 multiple on that 6 to 9 months out.
Buying the stock on dips and dollar cost averaging those dips is the best way to purchase this company. If I where investing $20,000 in this stock, I would invest in four $5000 increments, only on down days.
Wayde. |
