Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Identix (IDNX) -- Ignore unavailable to you. Want to Upgrade?

To: jean who wrote (10196)	9/4/1998 3:47:00 PM
From: David	Read Replies (5) \| Respond to of 26039

An attempt to put a present value to Identix: Jean, let me cheer you up a little. Brad's post was right on . . . IDX is undervalued. It sells for about $4.62 a share right now, but Salomon Brothers two weeks ago valued it at $11.70 per share. I would say that is more or less right. Let's break down the business into three lines: ANADAC services and consulting (valued by Salomon at about $2/share); TP-600 business (including Sylvan); and, bio-ID. Not knowing too much about ANADAC, I'm inclined to accept the $2 figure. Incidentally, IDX bought ANADAC in 1992 for about $.25 per share. The TP-600 line. I estimate TP-600 sales, from the past twelve months, have been in the range of $55 to $60 million. (After the 10-K is out, I may have a slightly better fix.) They are growing, without benefit of monster deals like the INS possibility, at a good 30%-35% a year (I include the hidden GSA sales in this estimate). The net profit is probably in the neighborhood of 10% (more as sales increase). OK, then, for this year: $57 million times 1.33 growth times 10% net = $7.6 million, or $.30 EPS. Let's give that a 25 multiple, or a $7.50 valuation. Adding in Sylvan, which Salomon figures to provide $.03 to the bottom line in FY99, and a multiple of 20 (since the market isn't established yet, despite growth potential), gives another $.60. So far, we are up to $2 plus $7.50 plus $.60, or $10.10. And we haven't included in what may be about $8 million a year (trailing 12 months) in bio-ID (international banks and prisons). None of this is Oracle-based. Growth rate not too clear, but let's say 40% a year. Net margin may be quite high. Let's assign 15%. Profit for this year: $8 million times 1.4 times 15% equals $1.7 million, or almost $.07 EPS. At a 30 multiple, that is another $2 per share, for a total of $12.60. That's close to Salomon's number. There are confounding variables in the way IDX presents its information, though, especially in the ANADAC side, so it is impossible for an outsider to be completely sure of these numbers. Please note I have not included any figures from rumored deals. Where have these hidden profits gone? Reinvested in the major bio-ID projects, I'm sure, and perhaps some R&D. With any major Oracle good news, my analysis could easily jump to $15 per share, somewhat less if the good news is TP-600 sales. In other words, I agree that Identix is a strong BUY -- and it remains a BUY even without any bio-ID business.