I know the Pru upgrade is a couple of days old, but here is the nitty
gritty anyway with some excerpts from the text:
12-Month Target Price: $36
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Ind. Div.: $0.01 Yield: 0.20% Shares: 1,675 mil. 52-Wk.Range: 38-23
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EPS FY Year P/E 1Q 2Q 3Q 4Q
Actual 12/97 $ 1.26 $ 0.26 $ 0.33 $ 0.29 $ 0.38
Current 12/98 $ 0.42E 69.6X $ 0.04 $(0.05) $ 0.08 $ 0.37E
Current 12/99 $ 1.80E 16.3X $ 0.43E $ 0.43E $ 0.44E $ 0.50E
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"With the PC inventory correction largely complete, Compaq's core PC
business is significantly healthier and poised to return to growth."
"We believe near-term catalysts for the shares include a seasonally
strong 4Q PC market and a return to more substantial earnings
growth. The fourth quarter will be the first quarter in which DEC is
expected to be accretive to earnings - this should cause investors to
have greater confidence in 99 earnings estimates."
"After the channel stuffing, subsequent inventory clearing and
marginal profitability during the first half of 1998, Compaq reduced
channel inventory levels down to targeted levels of 3.5 weeks in June
and 3 weeks in September."
"Compaq management has targeted the reduction of DEC's E/R ratios
from historical levels of 22-24% to 15-16% levels. These reductions
will be fueled by headcount reductions, 17,000 (or approximately
$1.02 billion) targeted to be completed over the next 9 months. By
the end of the September quarter, 5400 - or approximately $324
million - have already been completed."
"....if Compaq management is successful at re-igniting the company's
(DEC) top line product growth prospects, then earnings upside could
easily exceed $2.00 per share."
"We have used a 20 times multiple on FY99 earnings to reach our price
target of $36 per share."
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