I agree with Mr. Phillips. Remember when the stock was at 55, everyone was predicting 100, even 200? Now that the stock is at 18-20, everyone is predicting 0, 2, 15, etc... Excess optimism and excess pessimism ALWAYS corrects itself, as this situation will. The facts are that Iomega is trading at a P/E of 39 on THIS year's estimated earnings and less than 2 1/2 times sales based on aftermarket price of 18. Considering the growth rate of this company, don't you think it is a little undervalued at this point. Just as before, when everyone was discounting Iomega's products becoming the standards, now everyone thinks that the competition will kill them?
Fair value for this stock is about $30-40, it will return there by the end of the year. Also, remember, there are 18 million shares short (and possible more by now). These shares will have to be convered eventually. Further, I think this is an institutional play to flush out all the individual holders (most trades are between 100-1000 shares, not institutional volume) and start accumulating, as institutions look out 6-9 months when they buy, and in 6-9 months, the Zip and Jaz will be showing heavy penetration during the crucial Christmas season. Any thoughts? |
