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Strategies & Market Trends : Contrarian Investing
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To: pcyhuang who wrote (572)10/25/2006 10:20:10 PM
From: puborectalis  Read Replies (1) of 4080
 
One of the classic contrarian plays

"JDS Uniphase: JDSU guided to $312-$328 million in FY1Q sales. Our $326.3 million estimate is above consensus, which stands at $321.6. Our estimate is based on checks into the Optical business, which suggest another strong quarter of demand with continued capacity constraints, combined with management’s comments around the reverse stock split that it would only implement the reverse if it saw continuing EBITDA improvement. In our view, the fact the company did the reverse implies that revenues should at least be within the top half of the guidance range. Our EPS forecast of $0.02 for the quarter compares to consensus at $0.01. We note that if JDSU does produce an EPS profit for the quarter this will be the first EPS profit in five years at the company. We expect the December quarter to mark the first positive operating margin in over 5 years at JDSU. Given the pullback JDSU shares have seen in the past week following the reverse stock split we view the stock as attractively valued and recommend buying the shares aggressively in front of the FY1Q earnings report. Consistent with our investment thesis on the stock, we are looking for an upturn in global carrier triple play spending in 1H CY 2007 to drive outperformance in financial results and expect more or less inline results before that in CY 2H 2006."

biz.yahoo.com
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