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Technology Stocks : EFII - Electronics for Imaging -- Ignore unavailable to you. Want to Upgrade?

To: FiloF who wrote (1423)	10/14/1999 3:58:00 PM
From: FiloF	Respond to of 1460

individualinvestor.com Electronics for Imaging Crushes Estimates Again, But Shares Sell-off Electronics for Imaging has done it again. The imaging technology company crushed consensus estimates by nearly 20%. And by the looks of things, that should have sent the shares sharply higher in Thursday trading. "In fact, results came in so far ahead of consensus that shares were halted by NASDAQ pending news," noted Prudential's Alex Henderson in a morning note. Henderson, and all others came away impressed by the quarter. How then to explain the fact that EFI plunged in Thursday trading? More than likely, some have concluded that the company's meteoric growth spurt of recent quarters is set to cool. But a further look into the numbers shows a company that is still gaining momentum at a heady clip. Per share earnings of $0.53 a share were 18% of the expected $0.45 take. That's 71% ahead of last year's take. This marks the fifth straight quarter that EFI has topped results by at least 18%. Gross margins hit 49.9%, marking the fifth straight quarter of margin expansion as well. Thanks to the strong earnings, EFI is now sitting on a whopping $433 million in cash. Look for the company to deploy that cash in the coming quarters. Sales of $158 million in the quarter were a record for the company, and were up 13% sequentially. The top line expanded 22% when compared to year earlier levels. How good was the quarter? It's important to note, though, that EFI had been posting year-over-year sales jumps in excess of 40% in recent quarters, but the third quarter is a seasonally strong one. In short, a big spike in sales in the third quarter of 1998 made comparisons a little more difficult. In the current quarter, analysts think that EFI can boost sales 20% roughly $153 million. But earnings growth should still come in above 30%, assuming the company sticks by its habit of blowing out estimates. As a result of the morning sell-off, the shares have fallen back to $47, a level not seen since June. But that just creates a buying opportunity. There is no reason the shares should be hammered. But once a momentum stock has lost its trajectory, it's hard to get it back. A whole category of investors that rode the stock up are exiting, and will need to be replaced. Nevertheless, the stock should rise back up into the $60-70 range over the next few quarters, making for an attractive entry point at current levels. Analyst: David Sterman Updated on 10/14/99 with EFII at $47.50 Recommended 11/16/98 at $29.25