Notes from SSB analyst upgrade
We are revising our 1 yr price target from 150 to
250. Key reasons are a strengthening market sentiment,
a striking valuation discount with its peers and
our perception of less execution risk.
Using a
demanding required-revenue model, CLRS requires only a 77%
5 year (1999-2005)annualized revenue growth to
support the new price target--vs. 124%(ARBA), 132%(CMRC)
and 98%(FMKT).
In terms of simple valuation
(market cap to revenue (2000E), CLRS trades 37X vs
189X(ARBA), 152X(CMRC) and 130X(FMKT).
Assuming a 30%
return, our new price target of 250 implies an imediate
price target of 175. Even with that price, CLRS shares
would only recover a small portion of the valuation gap
indicated by the multiples.