FROM LEHMAN BROS:
Headline: Memco Software: Rev's up 92%-Raising Price Target to $35
Author: Michael E. Stanek 1(415)274-5336
Rating: 1
Company: MEMCF
Country: OPR CUS
Industry: COMPUT
Ticker : MEMCF Rank(Prev): 1-Buy Rank(Curr): 1-Buy
Price : $25 25/64 52wk Range: $28-10 Price Target: $35
Today's Date : 11/04/97
Fiscal Year : DEC
------------------------------------------------------------------------------
EPS 1996 1997 1998 1999
QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr.
1st: 0.01A 0.08A 0.08A 0.12E 0.12E - -E - -E
2nd: 0.05A 0.10A 0.10A 0.15E 0.16E - -E - -E
3rd: 0.07A 0.11E 0.15A 0.22E 0.22E - -E - -E
4th: 0.11A 0.18E 0.18E 0.35E 0.35E - -E - -E
------------------------------------------------------------------------------
Year:$ 0.23A $ 0.47E $ 0.51E $ 0.85E $ 0.85E $ - -E $ - -E
Street Est.: $ 0.45E $ 0.46E $ 0.76E $ 0.77E $ - -E $ - -E
------------------------------------------------------------------------------
Price (As of 11/03): $25 25/64 Revenue (1997): 30.5 Mil.
Return On Equity (97): N/A Proj. 5yr EPS Grth: 30.0 %
Shares Outstanding: 16.9 Mil. Dividend Yield: N/A
Mkt Capitalization: 429.1 Mil. P/E 1997; 1998 : 49.8 X; 29.9 X
Current Book Value: $3.49 /sh Convertible: - -Debt-
to-Capital: 0.1 % Disclosure(s): C, A
------------------------------------------------------------------------------
*Memco reported 3Q EPS of $0.15 on revenues of $8.08 million (vs our estimates
of $0.11 and $8 million). Revenues up 92% y-o-y, and 77% sequentially. EPS
up 192% y-o-y, and 50% sequentially. DSO's remained flat at 84 days.
*Memco released 2 new products: Proxima SSO (Single Sign-On), and SeOS for
Windows NT on a trial basis, with an anticipated full release in 1QFY98. The
company broadened its distribution through an agreement with EDS, as had
continued momentum from its relationship with Tivoli which released TME 10
Security Management based on SeOS technology.
*Memco signed a large teleco contract totaling more than $3 million.
Additionally, the company signed 20 new customers in the quarter, bringing the
total customer base to 150.
*The company made a significant hire by adding Gadi Maier as CEO of Memco's US
subsidiary. Mr. Gadi is a seasoned executive having served as VP/GM of the
Internet Business Unit at Cisco and head of new technologies at Oracle. This
hire adds serious bench strength to Memco's already strong management team.
* This was another strong quarter, with clear signs of momentum between key
partners such a as Tivoli, Platinum and EDS. Additionally, current and new
product momentum gives us comfort on our 4Q estimate of $0.18 and FY98
estimate of $0.85. We are maintaining our 1-Buy rating and increasing our 12
month price target from $25 to $35 per share.
BUSINESS DESCRIPTION: Memco Software is the leading provider of data-security
solutions for distributed, client-server computing environments.
------------------------------------------------------------------------------
Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The Lehman
Brothers analyst who covers this company also has position in its securities. |
