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Technology Stocks : Xilinx (XLNX)

XLNX 194.92

0.0%

Feb 14 4:00 PM EST

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To: Charlie Smith who wrote (2203)	1/20/1999 9:48:00 AM
From: Lewis M. Carroll	Read Replies (3) of 3291

Some quickie math. On the conf call, Wim was asked if Xilinx was returning to the historical 30% year-year growth rates of the past. Wim's quick answer was that 7% x 4 is 28% (actually the formula is 1.07 ^ 4 = 31%). Taking $0.45 and 7% per quarter, forward EPS is $2.00. Giving the stock a healthy valuation of 40, stock price is $80. So where do we go from here? 2-1 split announced which will put the stock back at 40 in March. Still, where do we go from here? How much steam can this quarter's earnings generate? Well, let's see. CS First Boston raises price target from $70 to $90. Prudential raises target from $65 to $100 and ups rating to Strong Buy. FY2000 (not cal. year XLNX FY goes March-Feb) EPS estimate is $2.34 (CS First Boston). At 40 PE, that's $93 - close to their price target. At their target, PE is 38. Virtex could generate substantial high-margin revenue by late 1999. 4000XL design wins are just starting to go into production so I believe there is lots of growth left there as well (also high-margin). I'm long 500 shares at avg cost of $67. My debate is not to sell or not to sell, but to buy or not to buy.

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