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

To: Sir Auric Goldfinger who wrote (244)	7/25/2000 1:40:56 PM
From: Obewon	Read Replies (2) \| Respond to of 325

OPTIMAL ROBOTICS R. SCOT CICCARELLI, CFA (OPMR*+# -- 31.94; BUY) (212) 885-4017 Stock Could Rally After Earnings Release FY Ends --EPS-- Dec Curr Prior P/E 52-Week Range: 49.00-10.44 12/99A 0.09 Price Target: 60 12/00E 0.30 106.5x Market Cap.: $434.0 Mil. 12/01E 0.95 33.6x o Stock could rally after earnings release. Some have questioned whether there is something "wrong" with Optimal given the relatively poor performance of OPMR shares. We do not believe that to be the case. Rather, we believe the stock is simply drifting due to lack of information flow. However, we believe the stock could stage a major rally if the company reports on-target or better earnings, as it will be the first substantive information flow since early June. Investors need to remember that information flow for Optimal naturally slows down at this time of year; in the interim, we believe the stock will be driven by fundamentals. On this front, we believe 2Q is likely to be the best quarter in the company's history. We continue to rate OPMR BUY with a 12-month price target of $60, and believe the stock could rally sharply after the 2Q earnings report. o We are highly confident that the company will meet or exceed expectations; execution is the name of the game. Demand for Optimal's U-Scan system clearly exists and is accelerating, in our opinion. Now, the company has to execute and 2Q's results should provide us with an indication of how the company is coming along in this regard (i.e., handling greater sales volumes and other operational issues). We are expecting a good report card. Sales - We are looking for a 125% increase in revenue to $15.7 million vs. $7.0 million last year and a 30% sequential increase. Our estimate is based on the sale of 155 systems vs. 68. We continue to project 570 systems and $58.7 million in revenue for the full year, or roughly double last year's figures. Profitability - Our 2Q EPS estimate is $0.10E vs. $0.04 ($0.04 is what the company would have reported on a fully taxed basis last year and is needed for an apples-to-apples comparison; the actual, untaxed number for last year was $0.05). We are estimating gross margin of 24.0%E vs. 21.2% and operating margins of 6.9%E vs. 5.1%. We expect margins will expand dramatically next year once the company takes over the assembly of U-Scan from PSC. We are also expecting a 400% increase in pretax profits to $2.2 million, even as the company continues to invest heavily in its business and infrastructure to support far higher volumes. INVESTMENT CONCLUSION Over the past two years, the summer has proven to be a fruitful period for buying OPMR shares. The stock tends to soften a bit due to the seasonal information flow slowdown, and then post sharp rallies after newsworthy catalysts (including strong earnings reports and the announcement of new customer orders). Currently, Optimal's primary focus is on execution (we have highlighted execution as the company's main risk) and we believe the company is executing even better than we had hoped on an operational basis. In addition, field checks continue to yield favorable store and customer responses. We continue to rate OPMR BUY with a 12-month price target of $60. Obewon/Valuation Guy