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Technology Stocks : THQ,Inc. (THQI)
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To: vc21 who wrote (6199)6/20/1998 1:56:00 AM
From: Bleeker  Read Replies (2) of 14266
 
Vic, Volpe Brown expects EIDSY to earn negative EPS and ERTS to earn
under 10 cents. This is not set in stone but these are new estimates I
have from an analyst at Volpe Brown. Even if THQI only met consensus
EPS of 20 cents for Q2, it would trounce the combined estimates of EIDSY
and ERTS by more than 100% before the charge.

So I was being overly cautious with that comment. It does not even
factor in the possibility of a surprise EPS above the consensus 19-20
cents. I used consensus estimates for all three companies because I
actually prefer to be conservative with my expectations. The point
of the comparison was not to tarnish the image of ERTS or EIDSY,
but to point out that at some point THQ will trade closer to the
industry average if its growth rate is consistently stronger than
the best companies in the sector. Right now THQ is valued as an
under average company in the sector and this is an anomaly. Furman
clearly recognizes this.

The industry average P/E of 22 you can source to a number of Wall
Street as well as regional firms, including to Halprin at Furman
Selz, Lin at Wedbush Morgan and D. Brown at Volpe Brown. Consider
that this was the P/E used when Electronic Arts traded at $40. Now
it trades at $49 and commands a P/E of almost 40, so the industry P/E
--if you take into account market cap--is probably a little higher
than 22.

Hope that helps:
Bleeker
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