On my price movement forcasts for CPQ and dell.
first, the move discussed,
DELL +100% or -50%
CPQ +30-50% or -20-30%
That is about as vague as you can get, But here is how I get there.
On DELL +100%, Investors continue to bid the stock up in a never ending love fest with the company. Good EPS numbers are thought to be needed for this, But If MSD manages EPS right, then weather the numbers are great or just so so, the stock could just go up. After all, Doesn't everyone expect this to happen ?
On DELL -50%, A poor job of manageing earnings, or a bad report or a... really anything bad happening that can not be "just ignored." Nothing bad can happen to DELL, The investors nor the company fear anything, so if anything shows up that should be feared, a huge change in perception of this overvalued part assembler would most likely not be well recieved by the market. If any of the huge sum of GO GO money in this stock starts to leave, there won't be a door.
On CPQ + 30-50%, The company is positioning itself well with the DEC merger, and if it exicutes well and DELL does not get crushed, then there should be good upside once it is clesr that Inventory is taken care of.
On CPQ -20-30%, If inventory takes longer than expected, if anything bad happens to dell, Net Net, a lot has been discounted already for this #1 PC maker. Plus with the addition of DEC, that brings more stable revenue with their large service division.
If DELL blows up badly, it make my forcast here look conservative.
As for CPQ's EPS being 0 for the rest of the year, I think most are expecting just that. That is why I think the stock reacted so well to comments that sellthrough is going so well.
As for unforseen demand, It might or might not matter.
Jim |
