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Technology Stocks : NEXTEL
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To: Rono who wrote (6480)6/2/1998 9:43:00 PM
From: Tavros  Read Replies (1) of 10227
 
Wonderbread,

Today's price action maybe related to the "strong buy" opinion issued by Morgan Stanley with a year-end target of $38 and a title of "enough already".

The thrust of the report was along the following lines:

1. Stock price is down in sympathy with the rest of the wireless players. NXTL is unnecessarily penalized because nothing has changed and all fundos remain in place oe expected to get better(i.e., expected additions for QII98;estimates >375,000).

2. Bad debt management has been dealt with aggressively and conservatively (i.e., losses taken upfront and possibility of recoveries).

3. Selling and admin expenses are getting lower as economies of scale are kicking-in ($453 per new addition in IQ98 as opposed to $545 in IQ97).

4. Capital expenditure will be in line with the company's plans of $1.5 billion. IQ98 above average reflects acceleration and frontloading, not overall increase. (Apparently investors are worried about it).

5. The new "eagle" phone expected in mid/late summer.

6. Analyst estimates that international operations represent at least $7 which is not fully reflected in the stock price.

7. The company will get positive operating cashflow at the latest in IVQ98 and possible as early as IIIQ98.

8. Stock price reflects a multiple of 15x 1999 operating cashflow which is low compared with other wireless players (or it may reflect lack of conviction on the part of the investors on the estimated cashflow).

9. All in all the analyst things that the price represents value at these levels (hence "enough already") and sets a $38 target price by year-end.

I hope the above helps

Patient tavros

PS: Not a huge amount of new info but good publicity coming from Morgan Stanley

4.
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