GunnAllen Financial Initiates Coverage Of CMVT with Strong Buy rating
And A 1998 Year End Price Target Of $60. Here is the URL:
biz.yahoo.com
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Tuesday December 2, 2:33 pm Eastern Time
Company Press Release
SOURCE: GunnAllen Financial, Inc.
GunnAllen Financial Initiates Coverage Of Comverse Technology With A
Strong Buy Rating And A 1998 Year End Price Target Of $60
TAMPA, Fla., Dec. 2 /PRNewswire/ -- The following was released today by GunnAllen Financial, Inc.:
Comverse Technology (Nasdaq: CMVT - news) designs, develops, manufactures, markets and supports computer and
information processing applications. Comverse Technology announced several months ago that it will merge with Boston
Technology, Inc., (BSN) in a deal expected to close by the end of January, 1998. The combined Comverse
Technology/Boston Technology entity will have 200 telecommunications companies, including 13 of the largest 20, as
customers worldwide.
The stock price of Comverse Technology has been under siege as of late. The stock recently hit its 52 week low of $31.38, a
steep decline from its high of $54.88 which it had reached several weeks ago. We believe that Comverse Technology's stock is
under pressure due to the fact that its merger partner, Boston Technology, has significant exposure in Japan.
Comverse Technology has solid fundamentals with $262.7 million in cash and, short-term investments, $321.3 million in
working capital, and a current ratio of 5.25x. We believe that Comverse Technology has excellent prospects for strong
long-term growth, especially following the merger with Boston Technology. First Call Consensus Earnings Estimates for Fiscal
1998 are $1.92, giving Comverse Technology a current P/E multiple of less than 17x projected 1998 EPS in an industry which
typically trades at significantly higher multiples.
Although we believe that the combined Comverse Technology/Boston Technology entity will be a formidable operation with
excellent long-term growth potential, there are potential risks involved. Analysts and investors may continue to punish the stock
of Comverse Technology due to its and Boston Technology's Asian exposure. Additionally, the merger transition may not go as
smoothly as anticipated, resulting in operational difficulties which could reduce profit margins.
Despite these risks, we believe Comverse Technology deserves a higher earnings multiple based on its revenue growth and
projected future earnings growth rate. Comverse Technology's stock represents significant value at these depressed price
levels, especially in light of its excellent long-term growth prospects in a rapidly expanding industry in which they already
maintain a very strong foothold. Based on projected 1998 EPS of $1.92 and an earnings multiple of 30-32, we have set a
1998 year end price target of $60 for Comverse Technology's shares.
SOURCE: GunnAllen Financial, Inc. |
