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Technology Stocks : Hummingbird Comm. (HUMC)
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To: Vahe who wrote (1629)6/18/1998 6:38:00 PM
From: Martin Goldenberg  Read Replies (2) of 2018
 
Vahe:

Lehman Brothers initiated coverage with an outperform.
Lazard Freres in N.Y. has a buy.
Montgomery has a hold.

So what does all this mean.

Essentially, I believe they all hold similar views. It's the projected growth in revenue of about 16-18% per year that's keeping everyone from recommending it as an outright buy. It's earnings should grow much faster but its R&D expenses should increase over previous years as a percentage of sales.

Montgomery rated HUM a hold based on flat 1998 sales. As HUM executes its transition strategy and shows signs of growth acceleration, they feel that this can be expected to translate into a meaningful upside potential to investors, say $40 US in the next 12 months. They remain bullish over the long term prospects but are cautious over the short term, as management pursues repositioning.

Lazard & Freres think that HUM should continue to profit from its revenue from connectivity SW with a growth of about 13% per year over the next 3 years: with gross margins of 95% and operating margins of above 43%. This should provide ample cash necessary for their business transition. i.e. to complete its data analysis line.

They also believe the data analysis market is young and that it should continue to expand at a rate of about 35% from about $4 billion in 1997 to $12 billion in 2000.

Doing some magical calculations, they believe HUM is an outright buy below $34 US.

So I am keeping my chin up. It is hard to believe that HUM share price could have fallen so low. Some of those short investors out there are going to get hurt if they are not astute enough to get out early enough. They appear to be creating the market right now. So we will see how this thing plays out.

It has been disappointing but I think I have sufficient facts to stay long.

Ragards.....Martin
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