Night Writer: I have extracted the recommendation contained in your link:
"20 Nov 98-Sold CPQ today because as I have stated, it is definitely lagging. I believe we will start rotating out of large cap tech and only issues of the highest quality we continue to see gains. I will maintain positions in all other issues as I believe in the companies and feel that, regardless of the sector in favor, they will continue to outperform the market. I could no longer say that about CPQ and have therefore gotten rid of it. If and when the three issues I identify in a previous article are addressed and results confirmed by earnings, I will consider reentering the position. I would also do so if it were to drop to 30 or below. Some may ask why I don't feel the same way about DELL. This company is a proven entity who has produced results but is now the victim of some bad publicity. I am not in the least worried about it, especially given the deal they made with CSCO today."
If there is a thesis that there will be a rotation out of lareg cap techs, it is surely because they have high p/e relative the general market. This applies to DELL par excellence and not at all to CPQ. Even if CPQ was affected by a general correction, why would it suffer more than DELL or some others?
A sell recommendation on 20th November, 1998 to be reversed if CPQ reaches $30 or if earnings are proven in the middle of January, 1999 seems to be driven by a short-term traders mentality, not the long-term investment aims he professes and which apparently governs his loyalty to DELL. Given that CPQ have already indicated that they are comfortable with WS expecations of 37 cents per share, it would seem that there is a good chance that this analyst will be recommending a buy in mid-January, after the CPQ price has been announced. It makes sense only if one believes that CPQ has a high chance of missing earnings. None of the 40+ industry analysts who follow the stock and monitor the company's actual performance has recommended a sell. More than 37 recommended a Strong Buy or a BUY. I noticed yesterday that one report available at the Yahoo Club site, but which cannot be linked, has calculated earningts expectations at a mean of 40 cents a share.
Victor |
