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Technology Stocks : Systemsoft Inc. (SYSF)
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To: Richard Lowther who wrote (2198)8/21/1997 12:00:00 PM
From: Louis Riley   of 3529
 
This one reminds me a lot of MWHS.

VERY LOW expectations going into tonight's earnings report (after the bell), and the stock has pulled back sharply from the $14 1/2 7/28/97 high. Consensus estimates are for $.11. I think this could be the quarter where they finally BLOW OUT.

The company put up great numbers last Q, even after the charge for the Radish acquisition. But H&Q downgraded shortly thereafter and killed the stock.

Here are the estimates going forward:

QTR QTR FY FY
Jul 97 Oct 97 Jan 98 Jan 99
--- --- -- --
CURRENT MEAN EPS 0.11 0.13 0.48 0.78

So, at $13 1/4 (when I first started writing this) the stock is trading at only 28X fiscal 98's #'s (which ends in about 5 months), and only 17 X fiscal 99's #s 17 months out, with a 63% y/y forward growth rate.

Only three brokers have estimates up.

One of them is James Poyner at Opco. I know Jim - he's a damn smart guy, with a wide institutional following. And this is his favorite pick. He thinks the Q is in the bag. He is the analyst who pounded the table on this one on CNBC a while back and sent it soaring. He will pound the table even harder tomorrow if I am right.

So, I plan to hold this overnight. If I am right you should see a breakout over the ~$14 1/2 level manana and a quick run to the 2/27/97 $18 high. Upward earnings revisions and P/E multiple expansion should then carry the stock into the $30's.

I plan to pyramid my equity all the way up. This will be a POSITION.

DO NOT PUT ON THIS TRADE WITHOUT DOING YOUR HOMEWORK.
The stock has been a real heartbreaker in the past.

THE STOCK IS EXTREMELY ILLIQUID, AVERAGING ONLY ~400M SHARES A DAY.

If they miss - YOU WILL NOT BE ABLE TO GET OUT. THERE WILL BE A HUGE GAP DOWN.

THIS IS GAMBLING, NOT PRUDENT TRADING.

But ain't it fun?

Louis
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