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Technology Stocks : VOXX (AUDIOVOX CORP) -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Vayda who wrote (83)	3/22/2000 12:13:00 PM
From: MulhollandDrive	Respond to of 168

>>Was the 'little stock that could' actually a Momentum play there for awhile?<< Yep, I think it was, Jeff. I think this morning may have been the bottom, but I don't see VOXX being much more than a trading stock for awhile. bp

To: Jeff Vayda who wrote (83)	3/23/2000 12:50:00 AM
From: LBstocks	Respond to of 168

Prudential's report on VOXX> AUDIOVOX BEAT OUR FY00-1Q EPS ESTIMATE. RAISING FY00 & FY01 EPS ESTIMATES, BOOSTING VOXX PRICE TARGET TO $65, KEEPING STRONG-BUY RATING Subject: Audiovox Corp. (VOXX?43 13/16)--OTC TELECM OPINION Current: STRONG BUY Analysts: James L. Thayer, CFA (212) 778-3201 Risk: HIGH 12-Month Target Price: $65 Ind. Div.: -- Yield: -- Shares: 22.1* Mil. 52-Wk.Range: 73-6 EPS FY Year P/E 1Q 2Q 3Q 4Q Actual 11/99 $ 1.28 $ 0.16 $ 0.22 $ 0.32 $ 0.56 Current 11/00 $ 1.60E 27.4X $ 0.25A $ 0.26E $ 0.45E $ 0.64E Prior 11/00 $ 1.50E $ 0.20E $ 0.25E $ 0.60E Current 11/01 $ 1.85E 24.7X $ 0.30E $ 0.35E $ 0.52E $ 0.68E Prior 11/01 $ 1.80E $ 0.50E $ 0.65E *There are two classes of shares outstanding: Class A has 19.9 million shares outstanding and each share is entitled to one vote. Multiples, price targets, ranges and volumes are based on Class A shares. Class B has 2.3 million shares outstanding, is not publicly traded, and each share is entitled to ten votes. At any time, a Class B share can be converted into a Class A share. Note: 50-day average daily volume is 585,700 shares. Audiovox designs and sells wireless-communications products (mainly phones and related services) and consumer electronics products (for niche markets such as automotive) worldwide. SUMMARY ? AUDIOVOX BEATS OUR FY00-1Q EPS ESTIMATE & MAINTAINS LEADERSHIP POSITIONS IN TWO HIGH-GROWTH INDUSTRIES ? BOOSTING EPS ESTS & PRICE TARGET We continue to believe that Audiovox?s prospects are excellent and we think that results for the latest quarter reinforce this opinion. In our view, Audiovox?s favorable outlook is based on its leadership position in two fast-growing industries: ú In wireless communications, penetration rates in VOXX?s domestic markets should rise to more closely match those of developed countries. Carriers are adding services and marketing heavily. Also, a transition to digital from analog is well under way. Further, wireless handsets are adding capabilities, such as Internet access. Finally, some competitors have dropped out of the market. ú VOXX is introducing new wireless-communications products and entering foreign markets, in some cases under the auspices of its domestic customers who are already overseas. ú In consumer electronics, VOXX is introducing new products and developing new marketing relationships (with OEMs, for example). During the FY00 1Q, sales rose 62% and net income jumped 78%, beating our estimates. AUDIOVOX REPORTED A VERY STRONG FY00-1Q. . . Diluted EPS rose 58.3% to $0.25 from the year-earlier $0.16 on a 61.8% increase in sales to $340.2 million. (The EPS gain reflected 77.7% higher net income and an 11.9% increase in average shares outstanding, as VOXX issued option-related shares and completed an equity offering in February.) While the gross margin dipped to 10.3% from the year-earlier 12.5%, VOXX continued to successfully leverage its overhead: the operating margin advanced to 2.7% from 2.5% and the net margin increased to 1.6% from 1.4%. Wireless handsets (and related products and services) accounted for 81% of quarterly sales: ú Sales of this business climbed 70% to $276 million, as unit sales were up 72% and average selling prices were up slightly. ú Digital handsets represented 62% of total sales during the quarter, compared with 37% a year earlier. (Thus, in terms of sales dollars, digital sales tripled from those of a year ago.) VOXX has expanded its sales of CDMA products substantially, but its suppliers of TDMA and GSM phones have had problems meeting orders due to component shortages. (We had not been expecting huge sales increases in this standard.) ú Wireless-handset gross margins dipped to 8.0% from 9.4% a year ago, due in part to the need to air-freight a relatively large proportion of shipments from Asian manufacturers to U.S. customers. (While analog product sales were flat during the quarter versus a year earlier, analog margins have risen as competitors have left the analog business.) The consumer electronics business accounted for 19% of quarterly sales: ú Sales of this business advanced 33.8% to $63.4 million. Almost all categories (sound, consumer goods, video) were up although accessories sales were down. ú The consumer electronics gross margin was about flat at 22%. . . .EASILY BEATING OUR ESTIMATES We had expected sales of $320 million, operating margins of 2.3% and EPS of $0.20. Sales of both business groups beat our forecasts. WE HAVE RAISED OUR EPS ESTIMATES FOR FY00 AND FY01 We now expect VOXX to earn $1.60 per share this fiscal year; our previous estimate was $1.50. We have raised our estimate because of strong 1Q results. Also, the TDMA and GSM product shipments that were curtailed in 1Q should be made up later on as the component shortages ease somewhat (our expectation). Important new products should debut during the current quarter: the CDMA tri-modal phone, the Web browser phone, and a voice-activated product. Also, there could be important handset contracts this quarter or next. Concerning the consumer electronics business, it should benefit from the introduction of new products. These likely developments, plus our industry assumptions, lead us to believe that there is upside potential to FY00 prospects. The revisions of this fiscal year?s estimates has prompted us to revisit our expectations for next fiscal year. Based on our year-to-year growth assumptions (with some more conservative parameters established), we have raised our FY01 EPS estimate to a conservative $1.85 from $1.80. WE BOOSTED OUR 12-MONTH PRICE TARGET TO $65 FROM $60 Reflecting our new earnings outlook (and the existence of upside potential in results over the next 21 months), we have raised our 12-month target price to $65, which is about 35X the EPS that we expect for FY01. This multiple is within the company?s historical multiple range as well as within the industry?s range.