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Non-Tech : Radica Games (RADA)
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To: Matt Black who wrote (2754)2/20/1998 11:40:00 AM
From: Wayne  Read Replies (1) of 7111
 
Matt,
Tough question. I think a large part of the answer to post earnings
is in the size of the run we get next week. At the $17 level, I feel
there is room for it to come up to perhaps as much as $20 without
getting wacked much more then 10% post earnings and maybe not
at all. This is provided we see some good numbers.

I also feel that Radica has yet to get their just reward for last
quarters $0.79 and at this point, I am viewing it as a trump card
that will get played sooner or later. If the price gets to lofty next
($22 +or-) week, maybe we retrace 1/3rd to 1/2 of the run. I think
we've tested the low end of the P/E for the year already and would
not look to see a drop below the 10-11 range. If we see the
earnings and rev growth in the 0.35 eps and up range (and
hopefully 0.45- 0.55) this may be enough to get that trump card
played on post release, if we are trading in the $18 range.

I think Q1 is a key to the year. If it says Radica's still in their accelerated growth phase (and I think they have a long way to go here), the ones that bailed due to Q4 going into Q1 concerns, can't do it two years in a row attitudes, and wait and see first Q results should have enough incentive to jump on before the P/E get back to last years averages. Also, there are the shorts to get squeezed.

It's a tough call but I think there is a better case then usual that it
doesn't get wacked on good numbers and solid guidance from the
company, IMO.

Wayne
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