Kevin--
Agree totally with your thoughts...VISX is most comfortable holding in my p.a. Although mkt sentiment is nearly as bad as Oct. VISX does hold up remarkably well...similar type of congestion perhaps to Jan/Feb followed by the breakout...could happen again post-earnings, IMO.
Definite long-term winner...in case this got lost (and you didn't see it) b/c of war over on the YHOO board, here are some main points culled from Goldman's initiation.
1. Expect op. margins to increase from 44% in 1998 to 55% in 2000 due to pure profit derived from fee per procedure revenue(estimate 96% drops to bottom line)
2. Revenue CAGR = 37% through 2000; EPS CAGR = 48% due to shift in business mix
3. Believe the patent portfolio, installed laser base, and strong reputation/word-of-mouth will protect their market share position and make it extremely difficult for Nidek and others to enter market without cross-licensing VISX's tech (thus ensuring the fee per procedure revenue stream)
4. Believe LVC procedures will eclipse 1 million in 2000--IMO, very conservative estimate
5. Star S2 lasers are in backorder--forecasting at least 25% growth in equip sales in 1999--again conservative, IMO
6. Believe that any new tech that threatens VISX's position could be purchased by VISX b/c of cash horde
7. Conservatively estimating that multiple will contract slightly to 45x 1999 EPS of $2.09(because current 47x discounting all good news from EPS upward revision), which yields a $120 price target based on 45x 2000 EPS = $2.61
IMO, very positive initiation all the way around--GS seems a bit wary of the huge run-up, but now that GS has coverage--any upgrade will really pop the stock. With the digestion of recent gains underway--could see this upgraded down the road, post-Q1 conference call.
Good luck, Kevin |
