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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Rev. Paris Green who wrote (3566)	2/25/1998 10:22:00 AM
From: clochard	Read Replies (2) \| Respond to of 18691

re: ETEC I keep wondering if the fat boys prop up all the stocks mentioned on this thread or is it the market in general?

To: Rev. Paris Green who wrote (3566)	2/25/1998 11:07:00 AM
From: Roger A. Babb	Read Replies (2) \| Respond to of 18691

Rev, ETEC is an interesting exercise in todays twisted market logic. The company claims that it will still meet the $2.39 target for 1998 earnings even though the first 2 quarters came in low. But holding the year estimate constant with lower early quarters causes the computer models to increase the projected growth rate and thus the models increase the price based on higher growth rate. By the computer models, a stock price will go up if it misses earnings but future targets remain the same. But a big crash comes if the annual target is lowered as happened with CIEN. The question now is: will ETEC meet the annual number? Q1 .41 Q2 .38 total is .79 annual target 2.39 remainder is 1.60 or .80 per quarter, more than double current My guess is that the annual number will be lowered and then the stock crashes. But until then, this PE/growth rate linkage is rewarding bad performance and it goes up.