Joe + Mike,
This eps report exceeded my optimistic estimates- if the market doesn't respond to these numbers, it may take dynamite to move it- if the market is stupid enough to ignore this report, I suggest we start buying more -eventually they will notice-you can't have 30% revenue growth and 328% net profit growth for long before someone notices- remember, these numbers do not include any of the benefits of the P+G agreement, which is not set to start tll 2-1-97- that deal may cost QDEL a few bucks ($200,000?? 43,000 drs offices + clinics x 2 free samples x the cost of producing each test for QDEL = ??$200,000 or so), but that deal will ultimately be a fantastic marketing coup for QDEL- I think the costs of this deal will largely be absorbed during the 4th quarter, but it will make H. pylori a big seller throughout the year and make QDEL's earnings and revenue somewhat less seasonal- thank goodness H.pylori is a "year round" disease! I look for eps of at least $0.05 in the 4th quarter and possibly as high as $0.08 again if the strep a "pipeline" wasn't completely filled in the 3rd quarter and/or the strep a season is bad (good for QDEL?). That would put the yearly earnings at the high end of estimates at 15 to 18 cents. Even at a relatively conservative p/e multiple of 40 x these actual fy 97 earnings, it would put QDEL at 6 (40 x .15) to 7.2 (40 x .18)per share. I think a 40 multiple is rather conservative for a company with this type of growth potential. A p/e of 50 time these 15 to 18 cents annual levels yields a price of 7.50 to 9 per share. If fy 98 estimates are in the area of $0.25 (very doable in my opinion- approx 6-7 cents per share per quarter), a 40 p/e yields a price of $10/share and a 50 p/e gives us a price of 12.5. Please forgive me for my optimistic ramblings but these numbers are not at all unreasonable- we now see that any increase in sales really does go pretty much straight to the bottom line. NONE OF THIS INCLUDES P+G DEAL, GLAXO DEAL, BAYER DEAL, OR SAFEPLAN. tHIS STOCK IS A LONG TERM HOLD IN MY OPINION,although I will be sorely tempted to sell a few shares if it hits 10- We all need to be patient since I think we will look back ata price of 10 and laugh 2 years from now when the stock is at 15+. BOB |
