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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Aitch who wrote (40882)	12/23/1998 12:58:00 AM
From: Aitch	Respond to of 97611

Robinson-Humphrey Raising Estimates Thread, Not sure if this was posted, oldish, but makes interesting reading... I find it interesting that their price target was "raised to $43". Been there, done that... H CPQ - Raising estimates and price target 07:22am EST 18-Dec-98 Robinson-Humphrey (ANASTASI/JOHNSON) Raising EPS estimates and price target based on results of fourth quarter PC channel survey. EARNINGS: 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 12/97 $.27A $.30A $.36A $.42A $1.34A Previous 12/98 $.01A $.02A $.07A $.37E $.46E Current 12/98 $.01A $.02A $.07A $.39E $.48E Previous 12/99 $N/A $N/A $N/A $N/A $1.60E Current 12/99 $.35E $.38E $.41E $.56E $1.70E Based on the results of our fourth quarter PC sales channel survey, we are raising our EPS estimates and price target modestly for Compaq. Our fourth quarter EPS estimate has been raised by $0.02 to $0.39 and our 1999 EPS estimate has been raised to $1.70 from $1.60. Our price target is also raised to $43. The findings in our survey that were relevant to Compaq were: * PC demand, as measured by sales out of the channel, appears very stable in the fourth quarter. Distributor growth steady at 20% year- over-year and corporate resellers should see sales rise by 7% due to less steep declines in ASPs. * ASPs are declining at a much slower pace and may even be flat versus the third quarter. This compares with 3% to 4% quarterly declines or a 15% Y/Y pace seen earlier this year. Stable inventory value substantially reduces the economic advantage of the "near inventoryless" direct sales model. * Channel inventory appears relatively unchanged compared with September at 35 days overall with 20-25 days on PCs. Stable inventory is encouraging for upstream suppliers to the channel including PC OEMs, electronics contract manufacturers, subsystem and component suppliers. For the first time in more than a year, sales into the channel should approximate sales out of the channel. Despite concerns to the contrary there is no evidence as yet of stuffing. * The environment for indirect selling PC manufacturers such as Compaq should be very good in Q4. Demand is steady, channel inventories have leveled off and flatter ASPs make price protection much less costly. The relative economic disadvantage that these manufacturers have endured for the past year should shrink this quarter and help sales and margins.