Justifying my contention that
CYBR share price is currently highly undervalued by Mozerd at Raging Bull
in my DD must see link -- ragingbull.com
Based on the fact that CYBR has on the books, right now, firm commitments for 100,000+ EHC units that will be deployed over a span of the next 4 years. Its quite apparent that few have recognized the earnings impact 100K EHC units will make.
Net Margin on Nework = 71.43%
Net Margin on EHC sale = 45%
Consider that CYBR will have 5 streams of reveneue which are as follows;
(a) Fee income from Network usage on direct EHC deployment ($280 minus $80 for expenses, leaving $200 net)
(b) Net earnings from the sale of EHC?s ($5,000 minus $2,750, less $500 for sales, $2,250 net)
(c) Fee income that will accrue from licensing Cyber-Care EHC Patents
(d) Net income that will accrue from joint venture agreements
(e) Fee income from 3rd party participants wishing to join the CYBR Medical Network, who?s income stream to CYBR could be very huge.
For (a) Net Fee earnings amount to $200/month recurring or $2,400 annually for each EHC unit.
For (b) Net earnings for each EHC sold/deployed is $2,250
Number of shares = 75,077,530 (fully diluted as of April 1st 2000, based on S3A )
Projected net Earnings at full deployment = $465 million [includes (a) and (b)]
Projected Earnings per share (EPS) = $6.19 (Net Earnings divided by number of shares)
Price (based on a P/E of 20) = $124
May 8, 2000 CYBR closing-price = $9 17/32
Now ponder the fact that my EPS calculations above do not take into account any (c) Fee income that will accrue from licensing Cyber-Care EHC Patents or (d) Net income that will accrue from joint venture agreements or (e) Fee income from 3rd party participants wishing to join the CYBR Medical Network, and who?s income stream to CYBR could be very huge.
If you?re wondering why I have not included these other earnings streams ? because CYBR have not as yet divulged all pertinent information for (c) - (d) - (e) and adds to the conservative nature of this PE projection.
Now consider the potential PE -- based of the following table that provides an outline based on EHC deployment numbers in excess of 100,000 units.
Number
of EHC Total Gross Income Total Net Income EPS PE
100,000 $836,000,000 $465,000,000 $6.19 $124
200,000 $1,672,000,000 $930,000,000 $12.39 $248
300,000 $2,508,000,000 $1,395,000,000 $18.58 $372
400,000 $3,344,000,000 $1,860,000,000 $24.77 $495
500,000 $4,180,000,000 $2,325,000,000 $30.97 $619
600,000 $5,016,000,000 $2,790,000,000 $37.16 $743
700,000 $5,852,000,000 $3,255,000,000 $43.36 $867
800,000 $6,688,000,000 $3,720,000,000 $49.55 $991
900,000 $7,524,000,000 $4,185,000,000 $55.74 $1,115
1,000,000 $8,360,000,000 $4,650,000,000 $61.94 $1,239
1,100,000 $9,196,000,000 $5,115,000,000 $68.13 $1,363
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BTW, if you think that I am being far to optimistic then please cut my PE column by 75% and guess what happens! You will be very pleasantly surprised. However;
Lets compare my P/E ratio of 20 for CYBR against that of QCOM?
QCOM is presently trading at $103, have earrings of $0.77/share, giving them a ratio of 142.50
Consensus Estimates for QCOM next fiscal year end and earnings are pegged at $1.08/share giving them a one year forward ratio of 105
Then look at QCOM?s consensus estimates for two years forward earnings and they are pegged at $1.43/share, giving them a two year forward ratio of 79
My conclusion is that Cyber-Care will do quite well achieving a one year forward Price/Earnings Ratio of 20 and that my numbers based on this multiple looks very reasonable..... if not downright enticing to say the least.
..DM..
(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy) |
