here's the CMVT excerpt from lehman bros' "10 uncommon values in
common stocks," dated 1 jul 98.
COMVERSE TECHNOLOGY, INC.
Price $51.88 Dividend Nil
12-Month Range $56-30 Yield Nil
EPS 1997A $0.75 P/E 1997A NM
EPS 1998E $2.18 P/E 1998E 23.8
EPS 1999E $2.62 P/E 1999E 19.8
In January 1998, Comverse changed its fiscal year to January
following its merger with Boston Technology.
Company Description: Comverse Technology is the world's
leading provider of voicemail and other enhanced services to
telecom service providers. Comverse's business comprises
Network Systems, the enhanced services family of multimedia
messaging and information processing systems, and Information
Systems, which consists of multimedia digital recording and
monitoring systems.
Fundamental Opinion: Comverse's core Network Systems
business should continue to benefit from expanding demand from
wireline and wireless networks around the world as service
providers seek to add revenue-generating enhanced services, such as
voicemail and information services. The Information Systems
division is well placed to exploit the transition from analog to
digital recording and monitoring systems by government agencies
and corporations. We are impressed by recent market share gains
and the successful integration of Boston Technology. Robust
revenue and backlog levels in the first quarter highlighted that
healthy trends in China and Japan and a robust environment in
Europe and the United States have helped offset weakness in such
countries as Malaysia, Indonesia, Korea, and Thailand. Following
strong results for Comverse in its first quarter after the merger with
Boston Technology, we increased our EPS estimates to $2.18 from
$1.97 for fiscal 1998 and to $2.62 from $2.45 for fiscal 1999. Our
revenue estimates are $691 million and $829 million, respectively.
Based on robust sales momentum, high backlog levels, and strong
visibility, we believe that these new estimates are likely to prove
conservative. To date, we have been extremely impressed by
Comverse's ability to deliver rapidly expanding earnings that
consistently meet or exceed Street estimates. Our price target of
$75 is based on our view that investors are likely to focus on
Comverse's rapid revenue and earnings growth in excess of 25%
over the next several years, enabling the shares to achieve a
multiple of at least 25 times our conservative 1999 EPS estimate.
In assessing risk factors, we recognize that large technology
mergers can potentially pose challenges. In addition, economic
uncertainty in Asia could affect Comverse's sales in the region
(18% of total in the first quarter).
Technical Opinion: Comverse appeared to be breaking down at
the end of 1997, only to reverse trend and rally back to its high.
The speed and ease with which it reversed suggest that it is building
a big base. A close above $56 would suggest completion of the
base and imply a target well into the $60s.
Lehman Brothers Inc. has managed or co-managed within the past
three years a public offering of the securities of Comverse
Technology, Inc. Lehman Brothers Inc. makes a market in the
securities of Comverse Technology, Inc. |
