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EZchip Semiconductor Ltd. Message Board

  • gizmo_puppy95 gizmo_puppy95 Nov 14, 2012 3:38 PM Flag

    How can this price be Justified?

    PE of over 200 years!
    This is seldom acceptable in the exception of maybe an Amazon as growth rates are presumed.
    Growth Rate is not meeting expectations here, according to price, which appears waaay ahead of itself.
    A value would be more like around $2.65 at most in my opinion.
    A field that has a lot of competition, which means your innovations must constantly excel all expectations.
    If you have profits I would advise to sell for now and wait for the better earnings.
    Sell now and buy back when their revenues increase.
    I am here as I read a post from 2010 that said this stock would be at $500 by 2014, so I decided to take a look, as it is half way there. What a JOKE.
    Good Company but extremely overbought and this is quite evident.

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    • 2013 going to be a big year for EZCH and FIO.

    • 1-High speed NPU market is projected to grow from $130M in 2011 to $800M+ by 2016.
      2-This niche is "locked in" by EZ via years-in-the-making design wins with 5 of the 7 largest Tier-1 providers, and many many other smaller regional players around the world.
      3-EZ took $80M out of the $130M in 2011 (80/130 = 61%) which imo should stay relatively the same or even get bigger as the niche grows toward $800M.
      4-gross margins are over 80% and net margins are over 50%!!!
      5-conservatively, if we only take 50% of the $800M and have only 50% net margins (they should rise not fall with economies of scale) that is $200M of pure profit on let's say about 40M shares outstanding by then (due to employees exercising their options to take ownership of what they have built over the past decade or more). That's conservatively $5/share EPS in 2016 (I believe it will be closer to $6-8/sh as all my assumptions underestimate). With just a 20 P/E ratio, that is $100/sh stock price, which is a triple from current prices in less than 4 years.

      Good luck if you short. You're going to need it if you are here for any more than a few trading points from volatility due to "tensions in the region". I suspect you will be gone fairly quickly, like most newcomers that only use backward looking numbers to make investment decisions. Be sure to let us know what you do in real time. Not "i shorted at $37.95 last week at the peak, and closed my position yesterday at the intraday low based on war fears". It's an old and tired routine around here over the years, from the losers that didn't listen to solid long term reasoning when we were in the teens.

      • 1 Reply to ezch_long
      • ezch_long,

        Thanks for your 2016 outlook. You used conservative assumptions which I appreciate. You didn't mention the NPS product, and I was curious how you think about it as far as long-term revenue projections?

        According to the company, that product could add a TAM equal to that of the high-speed NPU market. I know it's a complex, new product selling into a new market, so it's impossible to be very precise. For my simple thinking, the potential seems to be to add 100% to the long-term revenue/income figures for the high-speed NPU market alone. (The NPS is thought to start contributing revenue in 2015 or so, I believe, but the market will probably take a while to grow - no one really knows.)

        Maybe the kicker to the SP from NPS won't be seen until 2017, but it seems like all the more reason not to sweat any volatility while we're still at a relatively low SP. For multiples over the current SP, I figure I'm being compensated very well for any volatility.

        Appreciate any comments you may have on the NPS. Also, why isn't the company better known? I know it's relatively small but some big players (esp. CSCO, Huawei, Erricson, ZTE, and Tellabs) have a lot riding on this company's NPU and NPS processors.

        -P

 
EZCH
27.16-0.04(-0.15%)Jul 22 3:59 PMEDT

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