Spine-Tech (SPYN) Message Board

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Biotech / Medical : Spine-Tech (SPYN)

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To: ForYourEyesOnly who wrote (221)	12/7/1997 12:10:00 PM
From: John Bloxom	of 242

Hi THC: Here's how I see it: Forward estimates are .94 (12/97) and 1.62 (12/98); 5 year growth rate is thought to be 35% Current 52 week high is $52; $52/.94 = a 1997 high forward p/e ("hfpe") of 55 In the current interst rate environment, however, I personally like to use the lower of the current hfpe or the product resuting from multiplication of the 5 year growth rate by 1.3. Since 35 x 1.3 = 45.5 and 45.5 is less than the 1997 hfpe, I will use 45.5 as the forward multiple for 1998. That is, I am proceeding on the assumption that if nothing goes wrong, at its most exuberant moment in 1998 the market will repeat its 1997 behavior and will chase the price of the stock to a price which although less than the 1997 multiple, will nevertheless equal 45.5 times the then-current forward estimate. I am therefore projecting a 1998 hfpe of 45.5. 45.5 x $1.62 = $73.71, my projected 1998 52 week high. I usually sell at 90% of target; here that would be $66.34. $66.34/33 = 2.01 or about a 100% net gain from the current price. That's why I own this stock. Actually, that's why I own just about all the stocks I own other than those in the biotech area. Regards, John

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