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Ceradyne Inc. Message Board

  • tshih_90630 tshih_90630 May 24, 2006 6:42 AM Flag

    VALIDITY of 5 YR EARNING PROJECTION

     

    1) 27.5% annual growth rate estimates for next five years is too high and totally without foundation. Remember that analysts have raised the number from 20 to 40 in the beginning of the year or late last year, and then they reduced the number, right after Q1 earning report, from 40 to 27.5. Analysts will have to revise downward sharply in the future.

    2) Law of large numbers: It is much more difficult to grow 20% or more with the annual revenue base in the $600M range by the end of 2006, especially for a company increasingly relying on one customer. CRDN is not MSFT or CSCO where they have entire world as their customer.

    3) Target price projection is meaningless: Analysts reduced target prices from 38 early 2005 to less than 30 during the last correction, when price went down from 38 to 18. From mid-2005 to early 2006 they increased the price targets to 66. In many revisions analysts were just following the market.

    This topic is deleted.
 

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