>>There must be some significance to the fact that ASND is now officially a billion dollar company.<<
Some "mid-cap" mutual funds have guidelines prohibiting investment in companies with either revenues or market caps below a certain amount. The billion-dollar threshold that ASND just passed may now make it an investment option for some of those funds.
I'm trying to figure out when ASND's PE may begin to expand past 30-35, which seems to be tough to break. Understandable, based on last Q's debacle. My best guess, based on management's guidance, is that this expansion will occur sometime in the 2Q or early 3Q of 1998 (barring a bear market, of course).
Management predicted .25 for 1Q, leaving .91 for the 2Q-4Q '98 (based on $1.16 1998 FY estimate per Ashby). Based on the predicted "sequential" revenue growth picking up in 2H 98, and based upon the linear digression of gross margins, the last three Qs of 98 may look something like this:
2Q 1998: .27 (vs. .31 in 2Q 1997) = -12% EPS growth
3Q 1998: .30 (vs. .20 in 3Q 1998) = 50% EPS growth
4Q 1998: .34 (vs. .24 in 4Q 1998) = 42% EPS growth
This assumes that ASND does not beat estimates in any given quarter, which it is likely to do if the new GX500 etc products are as good as advertised.
In any event, if Ashby is right, the 3Q and 4Q results from 1998 should permit ASND's PE to expand to >40 (barring a bear market, etc.). Because the stock market generally looks ahead about 6 months, and assuming that the Street finds Ashby as credible as I do, we might expect a sustainable PE expansion sometime in the 2Q or early 3Q 1998. Before then, it will be difficult for the stock to get, and stay, above $40, barring a major announcement. I'm not predicting a 50 or 60 PE or anything of the sort (again, barring major news). It would be nice to achieve and sustain a healthy 40-45 PE, however.
I'm long and willing to wait. Just MHO. |
