Brian: A 2 month price target of $10 is a little low i believe.
What you have seen from the past 12 months is from one switch...
the 2nd comes on line about the 20th and the 3rd should come on
line in September sometime.
Look at some PE ratios for a minute:
On the day they released the numbers for last Quarter (1/23) the PE
dropped from 42 to 19 (using $2.50 for the base). The present PE
is 51 so we are already ahead of last quarter. Fundamentally, I would
think that the price should rise to at least $8 on 4/23. That day the
PE will drop from about 62 to 33 (using .13 and .24 EPS).
From there the PE could (allow me) rise to a top rate of 82 (if
you followed ASND and CSCC the PE ratios gradually increased to
reach the EPS growth). This would translate into a price of $20.
The PE number will keep rising if the EPS keeps rising which should
happen given only ONE of THREE swithching stations is in place.
So my prediction on 7/23 following .24 EPS for 7/95-3/96 would be
$20. Most likely it should be somewhere in this ballpark. Then if
EPS really kick in on 7/23 when they release their 4th quarterly
data (esp. because they will inflate it by ~$575,000 from court
costs that will be finished) the EPS could rise even further onto
the next quarterly data on 10/23.
You see, it's all a process that the market makes efficient over
time. Investors want to see if TLTK is for real and that might take
a few more months. When they do they will reward TLTK with a correct
PE ratio. Look at ASND, FORE, CSCC, MSFT, CSCO, ORCL. Granted these
are indeed different companies (computer stuff) yet EPS growth
relflects PE growth.
This is the major reason why i believe TLTK is a great investment
choice for me. Tracking them, this idea works.
On ething you should NOT do is compare this PE to the PE's of MCI,
Sprint, AT&T, Worldcom. They are not growing at the rate TLTK is.
No one can argue that. Remember, over time, markets are efficient
and i believe that TLTK's PE will keep rising on top of incredible
future EPS growth data.
Very Bullish, Yes. But for a reason. Since they released the numbers
two days ago, this kind of analysis is much easier to do. Will be
much easier further when we find out how NI as a percent or revenue
improves. They said in the 6/30/95 annual report that overhead costs
should decline over time. So we shall see how that pans out this
quarter...(12% not including court costs would be great).
Watching a PE rise from 42 (1/23) when people wern't sure about the
company to 82 in 6 months isn't really that much to ask for.
Again, that means (roughly) the price will rise from $2.50 to
$20 in the 6 month span. 82 could be low, we'll have to wait
and see...If the PE improves 20 points per quarter then it
will go into orbit!!!! However, i wouldn't necessarily watch it
move past 100 anytime. TLTK will probably not continue the rapid
growth as long as ASND has...we may be surprised though.
Do the homework on other companies with continued EPS growth and
this phenomenom will be releaved. If i applied this criteria a long
time ago with Spyglass, UUNT, SUNW, and CSCC during the end of last
year, i would have never invested in them. CSCC turns out would
have been fine if i held it but whatever.
This is enough analysis for a month..goto sleep now. |
