Mr S (gez can't make myself type the word - HA)
Cover things in steps. Presstek has found themselves in an untapped (being tapped) future market against some HUGE players. As for PRST being revolutionary, who knows, what is revolutionary is the SHORT RUN market, this market which in the past was nowhere near cost effective (customers are unwilling to pay the dollars required to perform all the pre-printing work) is now being attacked by new technology, Presstek so happens to be one of the players due to their alliance with Heidelberg. Heidelberg themselves are anticipating the change in print runs with the marketing of the QM-DI. At the bottom of the evaluation table there are comments about what portion of the market PRST can/should attain, pay attention to those. As for the margins on the plates, that's out there for discussion, I don't know for sure, as the company does not provide that information. The margins calculated are purely a guess doing some reverse financials. (I'm saying 3.3m, Pierre says 1.5m in plate sales) What I do know, is with the (Prod Revs-COGs)/Prod Revs margin is way to high to not ATTRACT competition. This is where the patent discussion comes in to the short position. I value the stock around 40/share in todays dollars, margins are becoming evident. If the patents hold PRST has the chance to captivate the market (doubtful in todays changing tech) and maintain the margins. What I believe is more likely, is PRST will be mixed with about 5 other players and hit the number 3 slot with about 10-15% of the market. Earnings increases are then evident with the rise in revenues. In terms of valuation of the company, go back and look closely at the values, (what is the price for the stock today compared to the evaluated price?) those values on the far right are being priced as a momentum play in todays dollars -- forward looking is already accounted for in the inflated PE.
Thing to remember and look for as you do your research on this is the change in the PRINT market as we approach the future. Things are becoming more CUSTOM thereby demanding a shorter run. PRST is filling the niche between CUSTOM (1 for) run and LONG (10,000+) runs. And yes, PRST plates can be used on other platesetters in the LONG RUN senerio, but there you have to do a 'quality' check - something LONG run is not as concerned with. As the saying goes, for a nickel more you can go first class.
Other thing to remember about SHORT RUN, it's predicted the the actual amount of print is to rise in the years ahead. Stop and think about it, say short run is 10% of the market now, and to become 40% of the market. Thats 4x more revenues for consumables, now if PRST can attain a market share of <1% to 5% in the same time frame, you're looking at a growth of about +20x in a few years. But like everything else, it's forward looking and who knows.
Will cover more as time permits, right now there is none. Spend some time reading some of the articles on the research page, they are both pro and con. Remember that research page is just that - research.
Pardon spelling and grammar, on the run.
Later, TOM |
