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Technology Stocks : PSFT - 1997 Outlook [closed thread] -- Ignore unavailable to you. Want to Upgrade?

To: Joe See who wrote (834)	1/31/1998 2:34:00 PM
From: Satyr	Respond to of 940

You could be right as you seem to have been following Peoplesoft a lot longer than I have. My TA study shows however that it should not go below 34. I would hope if your scenario is right that the stock just hang in it's current area and resume it's upward momentum after earnings.

To: Joe See who wrote (834)	1/31/1998 4:26:00 PM
From: Rick	Read Replies (1) \| Respond to of 940

My two cents: I would be very surprised, and concerned, if Peoplesoft dipped to 32 on Monday or Tuesday. Unless external events trigger a broad technology stock decline, Peoplesoft is well positioned for a very strong week. The most likely scenario in my humble opinion: 1) Monday and Tuesday stock trends toward its 52 week high of 39. 2) Wednesday, based on strong earnings report, stock eclipses 52 week high and holds in the low 40's. 3) Post Wednesday, as Wall Street updates its valuation models with new earnings and growth projections and issues buy reiterations or upgrades, stock goes anywhere from 45 - 50. 4) Mid to Late 1998 - $55 to 60 My fair valuation model w/ assumptions: Next Years Earnings - .70 to .75 (current consensus is .63) Continued Earnings Growth Rate - 65 to 75 % Implied PE Ratio - 55 to 75 Low Fair Valuation - $38.50 (55 x .70) Midpoint Fair Valuation - $47.375 High Fair Valuation - $56.25 (75 x .75) Granted, I am optimistic about the upcoming earnings report and likely upward revisions following. This is based, in part, with a comfort level with Peoplesoft accounting practices, which are believed to be among the most conservative in the industry (apparently a fair chunk of deferred revenue on the balance sheet which may migrate to the income statement at some point). The other factors that could drive the stock toward the high end of valuation range is any significant contract announcements. And, conversely the absence of announcements could restrain the stock to the low end. Other than external events, which Peoplesoft cannot influence, the biggest risk of the stock taking a hit is if Peoplesoft makes a large acquisition. It has been rumored that at some point they will want to integrate front office applications to it ERP offering. If they do this by acquisition, even though it probably makes sense strategically and for long term earnings, the growth projections will come down and the stock will come down accordingly. My guess (pure speculation / hope) is that the company will wait until the stock is higher and stronger before making a big acquisition. For What Its Worth. Rick.