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Technology Stocks : Compaq
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To: Aitch who wrote (34467)10/10/1998 4:20:00 PM
From: Night Writer  Read Replies (1) of 97611
 
Harrigan,
Welcome back. The well oiled roller coaster is still giving us thrills and chills. I just received a hard copy ACTION STRATEGY from PaineWebber Research. It is a little over a page and a half. I will try and outline some high lights.
NW
Date October 7, 1998
Opinion: Buy Analyst: Don Young Current price $26 1/5

Price Target: $40 assumes a 22 P/E on 1999 EPS estimate of $1.85 / share but note our valuation and EPS multiple may each be conservative by 15%, Providing potential appreciation to $45-$50 / share over the next 12 months.

Reasons to buy Compaq (I'm listing bold type reasons and not the detail information.)
Poised for a second half recovery
Encouraging direct distribution initiatives are underway.
Multichannel strategy viewed positively
Digital Equipment acquisition is accretive even without the realization of synergies.
"A New Millennium American" stock.

Technically Speaking
Last week's downside "gap" around the $31-$32 area (initial resistance) weakened the stock's consolidation efforts. Next support (below $27 area) lies toward its March-April 1998 lows in the $23-$24 area. Intermediate resistance lies in the $34-$35 area.

Investment concerns
There is a high level of risk associated with Compaq shares. PC industry profitability is subject to the balance between supply and demand, and all of the intellectual property in PC's is held by Microsoft and Intel. Also, Compaq could experience complications from integrating the DEC acquisition.
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