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For Your Eyes Only: Here's a recent IPO that is growing very fast through accretive acquisitions. For their recent earnings report (3/12/98) and announcement of acquisitions of 41 eye care clinics, click here: biz.yahoo.com The Business Vision Twenty-One (EYES) operates eye care clinics in 26 states. Most of the clinics are for optometry and ophthalmology, and some of the clinics are for surgery (including laser surgery). They contract with HMO's to provide eye care for their patients. EYES also has a rapidly growing Physician Practice Management (PPM) business which handles the administration of private eye care practices. The newest source of revenue for EYES is from their group buying program for private practices. The Growth Plan EYES is buying out existing clinics at a very fast pace, and they continue to sign up HMO's to ensure their revenue stream. By expanding the number of practices outsourcing their management services, EYES' FY97 PPM revenues are up 15 times over FY96. Total FY97 revenues were $56.2M, up from $9.6M in FY96. Including the announced acquisitions which will close in Q1, EYES now has an annualized revenue run rate of $185M. This puts the forward price/sales ratio at about 0.1. Earnings EYES just posted their first profitable quarter, coming in at .08 diluted for Q4 97. For FY 97, EYES showed a loss of .03. Currently, there are two analysts following the stock, and the First Call FY98 estimate is .89. However, the estimates have not yet been updated to reflect the latest accretive acquisitions. The current rapid expansion is estimated to eventually settle into a long-term earnings growth rate estimated at 30%. Technicals EYES had a successful IPO on 8/19/97 at $10 and then climbed to a peak of 15, from which it fell to 7. It based for 3 months in an ascending right triangle pattern which it broke out of on 3/11/98, prior to the earnings announcement. Today, it closed at 10 3/4 after rebounding from some post earnings profit taking that brought it down to 10 1/4. There is solid support at 9 3/4 and resistance from 12 1/2 to 14. Subjective Viewpoints I think EYES is likely to earn about $1 in FY 98 based on their present growth rate. For the fun of it, I'll give EYES a 12 month target of 22. Aside from various business risks, my biggest fear is that management will make a mistake in raising capital that adversely affects the value of the stock. This fear is alleviated by the fact that their present acquisitions include the issuance of new shares, but are nevertheless accretive to earnings. Provided they continue in this manner, we should do very well with EYES. Please contribute with your views and opinions regardless of their perceived popularity. Best of Luck, James PS Keep your EYES in your portfolio. ; ' ) | ||||||||||||||
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