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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Hank Stamper who wrote (18363)	2/13/2001 12:25:21 AM
From: Robert New	Respond to of 24042

Granted the Nasdaq is still overvalued based on historical standards however the question remains is JDSU overvalued, undervalued, or fairly valued based on a $40 price tag. When you look at the numbers we are currently trading at a 49 p/e based on the 2001 earnings estimate of .81 and a 36 p/e based on 2002 numbers given the current estimate of 1.10. Topline growth is expected at 115% for 2001. These numbers dont reflect any accretive effect due to the SDLI merger which is anticipated. As we all know a lot can happen in a year re the economy, etc... Historically the Nasdaq trades at about a 50% premium to the SP 500 given its higher rate of growth. Given that the SP 500 is trading at a 21 p/e currently I'd suggest that a 30 p/e would be considered fair value for the average tech stock. However, you also have to factor in some what of a premium for the market leaders that can show a consistent and steady stream of earnings. IMO JDSU is a market leader and thus affords that premium. They have certainly shown the ability to meet and and better yet beat expectations over the long haul. It seems that JDSU has been made somewhat of a poster child for overvaluation, however, when you break down the numbers a case can be made that JDSU is fairly valued to undervalued given the current climate and its anticipated growth rates. We should have somewhat better visibility as early as tomorrow evening as we will be hearing from the both companies regarding the financial impact of the merger. Good investing to you.