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Merrill Lynch launched coverage today = 3-2 (Neutral near term, Accumulate long term). The rating is about as poor as it gets in the "real world" of Wall Street, although ML occassionally has a 3-3 on stocks (God forbid if they go lower... it's so rare I've never noticed it).
Anyway, I sort of like the rating... when ML upgrades (or downgrades), boy does the stock move! Given a 3-2, there is much more probability for an upgrade. The report also mentions Yuri's 33% share of their market segment has been increasing (with even the big network boys as competitors), which is projected to grow at a CAGR of 57%!
The analyst thought the main risks were: 1) single product company, which the company is addressing by trying to broaden out into switches 2) the customer concentration, which ML pointed out that Split Rock is slowly lessening in importance and the other main customers are the "biggies" like LU and AT&T.
Although I don't recall the analyst specifically mentioned the expensive valuation, he did show a ton a similar stocks which basically pointed to the expensive nature of the stock. Nonetheless, I got the intuitive feel he likes the company and will like the stock sooner or later.
Hopefully I'll meet with the analyst sometime soon and get better insight. Still, I like that Cowen is very positive. |
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