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Technology Stocks : Optimal Robotics Corp. (OPMR) -- Ignore unavailable to you. Want to Upgrade?

To: Obewon who wrote (205)	5/25/2000 2:51:00 AM
From: J_W	Read Replies (1) \| Respond to of 325

GKM report on OPMR posted by valuationguy on yahoo. ------------------------------------------------------ FIRST CALL) GKMT: MORNING MEETING NOTES -- May 22, 2000 (Part 3 of 3) GKMT: MORNING MEETING NOTES -- May 22, 2000 (Part 3 of 3) 09:18am EDT 22-May-00 Gerard Klauer Mattison & Co. GKMNOTE GKMAM PDLI COL IBI MORNING MEETING NOTES -- May 22, 2000 (Part 3 of 3) OPTIMAL ROBOTICS/OPMR BUY R. SCOT CICCARELLI, CFA (212) 885-4017 ___________________________________________________________________ Price 52-Week Earnings Per Share P/E Ratio 12-Month 5/19/00 Range 12/99A 12/00E 12/01E 12/00E12/01E Target 34.13 49.00-8.97 0.09 0.30 0.95 113.8x 35.9x 60 ___________________________________________________________________ OPMR+#-- Quarter On Track; Revenues Should Double --BUY o We believe the quarter is on track, with both sales and EPS expected to more than double vs. 1999. With roughly six weeks left in 2Q, we believe Optimal's quarter is on track and expect sales to more than double from 1999 levels. We are forecasting 155 U-Scan sales and just under $15.7 million in revenue vs. 68 systems and $7 million in revenue in 1999. We are also projecting earnings will rise dramatically as pretax income should jump by over 400% to $2.19 million from $430,000 and EPS should more than double to $0.10 from $0.04 (assuming full taxation last year), despite a 32% increase in diluted shares outstanding. We continue to rate OPMR BUY with a 12-month price target of $60. o Company is focusing its efforts on its primary challenge - execution. Demand for U-Scan clearly exists and continues to accelerate, in our opinion. Now, the company's main challenge is to execute on its operations and business plan and ensure a smooth transition when it takes over the assembly of U-Scan beginning January 1, 2001. We believe the company is meeting these challenges, as its software team is meeting nearly all of its timetables (relating to software integration and customization for new customers and requested modifications by existing customers) and Optimal continues to expand its system installation capabilities through both internal building and outsourcing. The company also continues to prepare to take on the assembly of U-Scan and we believe that enough progress has been made in this area that full assembly of U-Scan could be taken on months ahead of schedule. All of these actions, while costly, greatly reduce the firm's operating risk, in our opinion. o First Carousel shipments and international exhibition will help highlight the quarter. In continuing to expand its already sizable market opportunities, we expect the company to ship its first U-Scan Carousel systems in 2Q. Optimal's customers (as well as most retailers) cannot find enough people to work in their stores and are seeking other ways to utilize Optimal's self-checkout technology. The Carousel and soon-to-be-introduced Solo could help solve this issue. In addition, the company will exhibit U- Scan Express at a European trade show in a few weeks. This will be Optimal's first exposure to the overseas markets, which we believe represent a significant incremental sales opportunity. o U-Scan directly addresses one of the biggest challenges facing the US economy. Several years ago, the concept of self-checkout was foreign, yet intriguing. Today, however, it is catching on rapidly with many of the nation's largest retailers. Further, rising wages and unsustainable low employment levels have been a common theme scrutinized by the Fed in its attempts to head off inflation. Employing self-checkout technology directly addresses retailers' employment issues. In addition, once companies install U- Scan, they see its fringe benefits, including improved customer service and rapid return on investment. INVESTMENT CONCLUSION Optimal Robotics has some of the strongest underlying growth trends we know of in the marketplace. The company is currently growing in excess of 100% per year, has substantial revenue and earnings visibility due to its high degree of backlog and earnings are poised increase substantially next year, once the company takes over assembly of the U-Scan system from PSC. Finally, due to general market volatility, we believe OPMR shares are very attractive at current levels. The stock is selling at less than 36 times our 2001 EPS estimate of $0.95 vs. an estimated 3-year growth rate of at least 50%, which represents a 28% discount to expected growth. Such a discount is unwarranted, in our opinion, given Optimal's fundamentals, visibility and growth prospects. We continue to rate OPMR BUY with a 12-month price target of $60. Within the past three years, Gerard Klauer Mattison & Co., Inc. was the manager (co-manager) of a public offering of the securities of this company and/or has performed other banking services for which it has received a fee. + Gerard Klauer Mattison & Co., Inc. is a market maker in the security of this company and may have a long or short position. # The Firm and/or its employees is an owner of options and/or warrants in this security.