Pancho, I know you're short AVEI, found this at thestreet.com <<A real heart-stopper: Bear Stearns analyst Rick Wise is the latest analyst to raise his earnings estimates and reiterate his buy on Arterial Vascular Engineering (AVEI:Nasdaq). AVEI makes stents used to hold open coronary arteries after angioplasty. It's been a topic of curiosity in this column from way back when its stock was at 6 a year ago; it closed yesterday at yet another new high of 43 9/16.
In his recommendation, Wise talks about the growth in the use of stents and how AVEI's stent is selling better than he had originally expected. However, while chatting up the company's rapid growth, Wise also warns that he continues to be "cautious as we look ahead to 1999." (Talk about hedging your bets.) Wise says that after the initial surge, prices of AVEI's stents are likely to fall in the U.S., thanks to competition from "aggressive larger companies, including Boston Scientific (BSX:NYSE), and smaller companies with little to lose and lots to gain in introducing credible products at lower prices."
So, why would Wise (and other analysts) continue to recommend the stock if they caution that its business is likely to come under pressure? It's almost as if AVEI has become the ultimate momentum stock, and Wise and the other analysts can't afford not to be there. But do they really think they'll be able to catch the turn in time to warn their customers?
And do they really think AVEI justifies its current market cap of around $2.5 billion, which is roughly twice Wise's estimate for the entire U.S. stent market this year?
Silly question in a market that views Internet stocks as a flight to safety.>>
Good Luck
Dave |
