Hi Rob,
good job in starting this thread. I have started buying BEL last year, have bought and sold and recently added before the last slide.
this post is a bit long, so we will divide it.
Analyst reports
read recent reports from Merrill Lynch, Morgan Stanley and Smith Barney. They ALL repeated their strong buys and left the 80-85 targets untouched.
I simply don't believe that these targets will be met any time soon, although I am a strong believer that VZ will eventually become one of the top 3 players worldwide. You could see in this absolute dismissal of the market's statement on the company (sell), either a willingness to be on VZ' side no matter what (the wireless IPO is coming), or a simple denial of what is happening. Should arrogance and self-centered thinking be part of an analyst's critical tools? Will these guys ever say: we were wrong, sorry?
the discussion of the eps shortfall was either minimal or confusing.
The Genuity IPO made it worse
the Genuity IPO, like the AWE ipo, was a way to ask a zillion from the market , with enormous price/sales multiples, that will take the stocks a long time to digest.
That was part of the VZ stock decline, I think, because if the high growth part of the company was going under, why should the stodgy part go up? Somebody said this a black eye in Morgan Stanley's face. Well, I know some people who bought GENU and they wish they did not (it went down even more despite a long series of strong buys and 15-21 targets), so they actually got the black eye, and the red in their accounts.
GENU will of course be there, eventually, but was it maybe better to price it with a lower price/sales multiple, which would have allowed the stock to go higher and make the whole story look good, as it likely is?
VZ will be ok long term
While VZ business model is strong, I think, the analysts have clearly done a very poor job of guiding investors on this company and they continue to do so by refusing to downgrade the stock after the market has already done it.
Luckily, we all bought at a fairly low p/e, and that does matter. So. VZ will (hopefully) recover.
Best to be contrarian and value-oriented
This adds to my often correct contrarian strategy of buying beaten stocks, once touted for astronomical targets.
If you think independently , do your homework and are correct, the market will reward you very well. If you are wrong, though, you are alone.
... so you can go to the beach
With the proceedings of some contrarian trades, we would be pleased to offer some of these analysts a vacation on the beach, so they could refresh their mind and body...
In summary, I would say that the use of reading these reports to me is just to know that the company is followed.
numbers, numbers, numbers
Looking at the long term numbers and putting them in perspective with the current business status of the company is, in my opinion, more helpful than acritically relying on these (often missed) targets.
the numbers I like to see
low historical p/e, low p/sales, high profit margin, high ROE, no debt, large cap (even after fall in stock price) compared to competition
VZ has most of these now
This is especially true after some bad news totally destroy a sound company (BMCS, KLIC, GPSI), and you look at the analysts reports written before the deluge and wonder: what were these guys looking at?
I wish somebody would come up with a totally independent firm like S&P, writing reports more detailed like investment banks do.
Analysts are not always bad
well, I guess enough complaining, there are also cases when targets are met and we do make good money because the analysts' calls move the price up.
They also educate us in writing extensively and often insightfully about companies. Long term, they tend to be correct, especially on large caps.
let us hope that VZ will recover
good to see you here, Rob
Alfredo |
