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Technology Stocks : Stratex Networks, Inc. (STXN) -- Ignore unavailable to you. Want to Upgrade?

To: Shankar Kumar who wrote (1127)	10/12/2000 6:06:29 PM
From: Rob Preuss	Read Replies (2) \| Respond to of 1762

Yes I agree... the $25 target is way too low. FSVK said (1) among companies in this group, the average ratio of market capitalization to annual sales revenue is 8. (2) using only a ratio of 4 and projected 2001 sales gives a share price target of $25 (after dividing by the number of shares outstanding, of course). Now why they would use a ratio of 4 when the group average ratio is 8 is a mystery to me. STXN is the 800-pound gorilla in this market... a strong company with great products, great management, huge orders, no debt, growing profits, and a temporary problem filling all those orders because their suppliers have been unable to keep up with the demand. Given that they are addressing that problem in tangible ways (as announced in the press), it makes no sense to me to discount this company AT ALL let alone by a huge factor of two (from 8 to 4). [Bear in mind, they're talking about a discount to the AVERAGE ratio for the group... so they're essentially saying STXN is a below average company - I say its above average.] So for my target, I'll use the ratio of 8 and get $50/sh. Even that may be conservative. STXN has a string of new products and the first of these is about to be introduced; I expect the first of these to start contributing to both sales revenue and EPS in a meaningful way during the next 12 months. Rob PS) Here's the analyst history for STXN biz.yahoo.com and the analyst history for DMIC biz.yahoo.com