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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: pass pass who wrote (3860)	12/14/1998 11:33:00 AM
From: Henry Eichorszt	Read Replies (2) \| Respond to of 4509

FROM BRIEFING-PeopleSoft (PSFT...18 13/16) Brief PeopleSoft is a leading provider of enterprise application software for business, education and government... Company's solutions for manufacturing, supply-chain, financial, project and human resource management are used by more than 2,700 customers worldwide... Stock sports a market cap of $4.4 bln. Trading Points •PSFT down 67.2% from its 52-wk high is now trading just above its recently established 52-wk low... Late year tax selling and portfolio adjustments keeping downward pressure on this serious underperformer. •Stock also came under pressure when Oracle (ORCL) spokesperson noted that SAP (SAP) was slashing prices to retain market share... SAP is the dominate player in PSFT's market. •But at current price, much of the bad news is already built into the stock... In fact, we contend that long-term risk/reward ratio now favors the upside... As such bargain hunters might want to take advantage of seasonal factors to (re)enter long-positions. •Stock's setting new lows in mid-December often very good short- to intermediate-term buys. •Recent weakness occurring amid weaker than normal volume. •Valuations quite attractive relative to the market and industry, as PSFT trades at 29.9x estimated FY98 results ($0.63) and 24.8x projected FY99 earnings ($0.76)... Using projected long-term growth rate of 33.1%, stock sports PEGs of 0.90 and 0.75. •Though earnings growth has slowed from previous pace, still much better than market... In addition company faces favorable comparison period by mid-99... Given depressed price, positive earnings surprises could ingite buying frenzy as out-of-favor company wins back disenchanted street. •Note only 5 firms rate the stock a buy while 16 rate it a hold... Plenty of room for upgrade related gains. •PSFT is a good company, with an impressive product profile, solid management team and history of strong earnings growth... Risk tolerant, long-term investors can take advantage of difficult '98 before stock regains its premium status. •Our initial target is 24, with a long-term objective of 31 3/4.