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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: kvkkc1 who wrote (53075)	5/17/2001 8:41:25 AM
From: Stock Farmer	Read Replies (2) \| Respond to of 77400

kvkkc1: If they believe that growth will return to 20%, and they believe in their own earnings estimates, how do they come up with a valuation range of $10-$15. Using the high end of the 20-30% range, you get a $7.20-$11.70 valuation range. Yes... they are using CSCO valuation math. Which as far as I can tell works as follows. Use fundamental analysis that most people would call reasonable, with as many optimistic assumptions as possible. Come up with a price range where the bottom end is lower than the top by 50%. Then because the Internet is so important, take the top end of this range for the bottom, and double the bottom to get the new top, and round to the nearest $5. Thus a "Fair" range of $7.20 to $11.70 becomes $11.70 to $14.40, which you round to the nearest $5 to get $10 to $15. Presto. John.