DCF:
1) CORRECTION: in my earlier note, I had indicated (off my head) that the 1999 revenue forecast was $100 million. The correct numbers are:
- 1999 revenue forecast $60 million
- 2000 revenue forecast S100 million
2)With repsect to your question, I called Dexter Talwar from NHM today, and he indicated that of the 2 disputes with the European Funds, one has been settled and the other one is still at the tentative stage with discussions ongoing.
With respect to the impact on the stock, my opinion is the following:
if these European funds continue liquidating rather than holding the shares, it will have an impact on the stock price. The impact cannot be measured as the funds are the ones to determine at what rate they liquidate the shares, and how many they want to liquidate (they may decide to keep a portion). On the other hand, however, the negative impact of any shares liquidation, may be partially or more than offset by continuing ever improving quarterly results, or news releases of additional new contracts, etc...There is no telling what the stock price will do, and when.
As far as I am concerned, my decision is rather easy, because I tend to be a long term investor when I have found a good company. I view this low price period as an opportunity to accumulate.
NHM's corporate objective is to generate sustainable after-tax returns of 15% on sales of $100 million per year. To oversimplify, a "back of the envelope" calculation would be $15 million profit on 17,500,000 fully diluted shares, or $0.86 profit/share by the year 2000; using a conservative factor of 15 would give a $12.9 share price; a factor of 20 would give a $17.2 share price...I am willing to buy at today's price and wait for a few years. Hope this helps.
Saverio |
