The earnings were right in line with the preannouncement, but when a stock blows up like this, it always seems like there's a second leg down. I was afraid that there would be more news that would send the stock down (like the downward earnings revisions we saw today), and there might be more to come.
I think the stock is a great value at these levels. Short-term, you could probably play it for a few points, maybe back to around $14. I'd be cautious about it going any higher, though, since many of the analysts who downgraded it two weeks ago haven't yet reduced their estimates as far as I know. While HRBC may have appeared fairly valued in the 20's before, if a few analysts reduce estimates, a valuation in the mid to high teens seems more likely, but I could live with that.
I'm surprised no one has started talking takeover potential. HRBC has been an aggressive acquirer over the past year or two, and it seems like a good target itself. Its product portfolio makes it an even more attractive target, especially given some of the products from the Premenos acquisition... considering you could now buy the entire company for not much more than HRBC paid for Premenos less than a year ago. |
