hoops -
just got new batteries for my crystal ball, so here goes...
Over the last 3-4 years, CPQ has shown a tendency to rise through the summer and fall, then drop back slightly through the end of the year and 1Q, with a more severe drop around march-april which has typically been the low period for each year. take a look at a 40-week chart and you will see what I mean.
This pattern has been very consistent. With a little work one can map the revenue curve and the stock price curve, adjust the vertical scales, and map one year on top of another, it's pretty much the same curves year after year.
Each new plateau is about 2X the previous plateau so the price has gone up a little faster than revenue growth, reflecting an increasing confidence that CPQ will be able to maintain growth long term. in this regard CPQ does not have anything like the long term growth requirement built into the stock price that say Dell does, which means that the upside potential is still quite rationally tied to real fundamentals and not impossible expectations.
I would therefore expect for roughly the same pattern to continue, but given where CPQ will be in absolute revenue at that point the vertical axis will start to get compressed. So I would see the price growth as slightly subdued from past years as CPQ's growth rate will not be as great going forward simply because of their size. This would imply a price in the 40's later this year, a pullback to mid-30's in spring of 99, a rise to the high 50's or low 60's in fall of 99, a pullback to low 50's in spring of 2000, a rise to the low 70's in fall of 2000. And so on...
That's my story, officer, and I'm sticking to it. <gg> |
