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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Rick Buskey who wrote (120134)	12/22/2000 12:54:12 PM
From: 2MAR$	Read Replies (2) \| Respond to of 120523

Avici Sys Up-3: AT&T Deal Worth More Than $10M: Analyst UBS Warburg Friday issued a company update maintaining a buy rating on Avici shares. However, he lowered his target price on the company to $70 a share from $200. In the past, UBS was valuing Avici relative to its peers, said analyst Nikos Theodosopoulos, but with Nasdaq's slump, it's time to look at these companies individually. The price target is based on a price-to-earnings ratio of 100 times his normalized 2002 earnings estimate using a long term model of 20% margins. Theodosopoulos said that sort of PE ratio is unsustainable, but with an early stage company like Avici, just starting to collect its first revenue in a market with a "high barrier to entry," determining a valuation for the stock is "more art than science." UBS expects AT&T to make some sort of announcement regarding the Avici product sometime in January. Investors will have to wait until the announcement to truly see the magnitude of the deal, said Theodosopoulos. However, judging by the size of the warrant issuance, he said the deal may be in the "multi-$10-million-dollar range." Avici, founded in 1996, began generating its first revenue this year, $7.1 million for the 9 months ended Sept. 30. With about 48.2 million shares outstanding as of Nov. 6, Avici currently has a market capitalization of about $1.2 billion. Its stock, after a July 28 initial public offering at $31 a share, soared as high as $174.50 by Aug. 4. By Nov. 28, the stock hit a low of $16.25. In a conference call Oct. 19, Avici increased its sequential top-line growth forecasts for the fourth quarter to 25%, and predicted 10% to 15% year-over-year growth in 2001 and 5% in 2002, said the spokeswoman. According to that model, both Avici and analysts following the company project profitability in the second or third quarter of 2002, she said. -By K. Maxwell Murphy; Dow Jones Newswires; 201-938-5173 maxwell.murphy@dowjones.com (END) DOW JONES NEWS 12-22-00