The expectations for Ezchip is well advertised for over the next few years. Would it be too aggressive to plan on an average 50% return over the next several years? Are the following year-end Ezchip stock price targets too agressive for planning purposes?
Any thoughts would be appreciated!
Hi red_sox. I never said management owns the company. They RUN the company via goals and processes. (I can't believe you turned this into a "management raping a company" discussion. Is that what you think of Eli and his team?)
You said that management should sell the company at the top of a cycle, rather than focus on the long term strategy, revenue and earnings growth. I think it would be a mistake and short sighted to sell the company because a cyclical downturn might be ahead. Many great companies have weathered the storms of time, only to come out stronger and better overall.
Since this is a pretty complex topic overall, I think it is fair to say we could politely agree to disagree. We seem to differ philosophically between shorter term and longer term views. Best of luck to you in picking your cycle peak.
True, however investors are advised to be cautious when buying stock in a company in which the majority of the stock is held by the founder. Clearly, as you state, managment/owner's interest are not the necessarily the same as shareholders. If shareholders are lower on the totem pole then their shares have a lower value and therefore the price should lower. Anyone who buys shares in this type of an outfit may be a sucker at the end of the day, as management/owner has a plan to circumvent shareholders ability to have representation in the company. AUBREY AUBREY AUBREY RIP OFF ARTISt
I hate to explain to the lesser minds. If a private goes public and the original founders hold majority shares as in my own company, where does my feduciary obligation rest. I want to make the profit from selling out as much as I do higher stock price company profit and increase dividend. Get it? I know your little brother does.
I never said they should sell. I simply stated they really can not think about that. I look forward to them staying at the forefront as long as possible. Everyone in the welfare line has a smart phone, so I think the future is bright for EZCH. I only drink the finest, thank you EZ profits.
Analysts average consensus on earnings for EZ is about 26% per annum over the next five years. That may not support a 50% per annum increase in the stock price, but if EZ does increase earnings at a 25% per year clip or better, you might expect the stock to appreciate in that vicinity (25%) if the PE ratio stays constant over that time frame. Of course the market doesn't always make that type of connection between earnings and stock price. EZ could be undervalued or it could be given a premium as a fast growing company. I guess bottom line is EZ's stock has a good chance of out-performing if they can hit these lofty earnings targets, and the market bids up the stock accordingly. I wouldn't "plan" on 50% per year though. If that does happen than it will be a happy surprise for us all!
Trying to look more than a few quarters ahead is futile in any tech industry. Think about cell phones 5 years ago... and five before that ? Kids now do not know what cassettes or even CDs are. Stay on your toes, and pull the profit when you can. Otherwise you might be scratching your head thinking how great Kodak film was.