NBMO: Orckit: Establishing a 12-month price target of $40.
(drop an email for full pdf w/projections)
- We are establishing a 12-month price target of $40 for Orckit.
Investment Opinion. We are reiterating our BUY rating on Orckit, and establishing a 12-month price target of $40, vs. our prior near-term price target of $30. Orckit represents a near pure-play on the expected deployment of ADSL for faster connections to the internet.
Recent checks in the market indicate that ADSL deployment appears to be picking up steam, as both carriers and vendors have become more bullish in their predictions regarding both timing and magnitude.
While other companies should also benefit, we believe that shares of Orckit offer particularly strong appreciation potential due to the ADSL pure-play aspect as well as the earnings leverage from strong ADSL business.
Due to the company's significant earnings leverage, we believe that Orckit could earn well over $2.00 in 2001; applying a multiple of 20x to this estimated 2001 earnings power, we arrive at our 12-month price target of $40.
- We are establishing a 12-month price target of $40 for Orckit. In our last comments on Orckit, we reiterated our BUY rating on the stock with a price target of $30. We are now establishing a 12-month price target of $40 on shares of Orckit.
Investment Opinion. We are reiterating our BUY rating on Orckit, and establishing a 12-month price target of $40, vs. our prior near-term price target of $30. Orckit represents a near pure-play on the expected deployment of ADSL for faster connections to the internet.
Recent checks in the market indicate that ADSL deployment appears to be picking up steam, as both carriers and vendors have become more bullish in their predictions regarding both timing and magnitude.
While other companies should also benefit, we believe that shares of Orckit offer particularly strong appreciation potential due to the ADSL pure-play aspect as well as the earnings leverage from strong ADSL business.
Due to the company's significant earnings leverage, we believe that Orckit could earn well over $2.00 in 2001; applying a multiple of 20x to this estimated 2001 earnings power, we arrive at our 12-month price target of $40.
In the near-term, GTE is hosting an investor meeting on Wednesday in New York to discuss the company's Internet strategy. Given the recent tenor from other service providers regarding their increased expectations for ADSL deployment in 1999, we expect that GTE will offer a similarly bullish outlook for its ADSL activity for the remainder of the year. Given Orckit's position as sole supplier of ADSL gear to GTE, we expect that this meeting may provide a near-term
catalyst for the stock. |
