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Strategies & Market Trends : The New Economy and its Winners
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To: The Ox who wrote (56626)5/30/2014 1:05:11 PM
From: The Ox  Read Replies (1) of 57684
 
SPLK price targets lowered across the board, from unbelievably high targets. This is a perfect example of doing the exact opposite of what analysts often suggest. Most of them completely lose credibility when they drop a price target by 33% to 46% after the fact.

Certainly, at $40/share it's more in line with reality and could be a great long term buy. However, knowing that growth is not going to be quite as robust as the street wanted everyone to believe will be a potential head wind. With roughly $400 Million in sales by the end of this year, Price to sales of 12 is a much more realistic market cap. This could allow for some expansion if growth turns out to be a bit more robust in the next couple of quarters. Even at 12 times sales, you are still pricing in a lot of the future.....

From my February post:

For example, we bought SPLK at $31/share but I wouldn't buy it here at
$90/share, even with the solid growth they've shown over the past 2 years.
Trading at 35 times sales seems a bit excessive, even with their solid gross
margins and revenue growth. Similarly, we purchased CRM the last time it fell
below $40, but would certainly hesitate to pay $64, even if they are much more
in line at 10 times sales.
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