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Technology Stocks : Vanstar
VST 169.00-1.4%Jan 14 3:59 PM EST
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To: robert miller who wrote (321)12/6/1997 2:39:00 PM
From: Will Cunningham  Read Replies (2) of 420
 
Below is a very shortened version of what the Lehman report states:

Upgrading Vanstar from a 3-Neutral to a 2-Outperform recommendation.
* With the demonstration of sustained product growth, continued services strength, and improved services profitability we feel increasingly confident in the fundamental outlook.
* We believe that channel assembly initiatives will spark huge consolidation in the industry, benefiting those channel players (such as Vanstar) included in such programs.
* We have maintained that -when executing- Vanstar shares can command a premium to many of its peers as a result of its richer profitability levels. We believe the shares have been - and remain - under-valued.
* We are initiating a 12-month price target of $19 1/4 and raising our rating on the shares to a 2-Outperform.

We derive our price target of $19 1/4 in the following manner:
FY99 Product Services Total Earnings $0.52 $0.78 $1.30 Multiple 10x 18x Value $5.20 $14.05 $19.25

We believe this quarter marks significant improvement in the company's fundamentals. Our expectation for a robust product growth outlook, coupled with the company's strong services business (and improved profitability) and management's more conservative outlook leads us to upgrade the shares from a 3-Neutral to a 2-Outperform.
We are launching a 12-month price target of $19 1/4.
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