There are at leaset two other reasons WIND is declining.
First, the tech market is going down, lowering relative merits of all tech stocks.
Secondly, WIND's growth rate has declined now to approximate its trailing P/E. Till now, the P/E has always exceeded the bottom line growth rate which itself was quite a bit higher.
Even though we may see even lower prices, IMO, both these factors make WIND a better buy now than anytime in the last two years or more. The tech market outlook is cyclical. And the declining ratio of earnings growth to P/E is a function of the delay in I2O royalties.
As I2O starts to come in (not to mention unannounced royalty bearing wins), top line growth will continue its stellar performance, while net margins will improve. Hopefully, we'll benefit not only from 40+% top line growth, but also from 50+% bottom line growth going forward, and a consequent upward reevaluation of forward P/E.
Admittedly, though I am not well versed in TA, I can't imagine that WIND's chart looks good. Again, the lower the stock goes, the better the buying opportunity as long as the company continues performing.
I don't know of any factors to indicate that it won't. |
