) to outperform from neutral. Yesterday the company posted 47 cents second-quarter earnings per share.
Analyst Gregg Cappelli says while he expects the stock to be volatile in the near term until the company can further demonstrate revenue, margin stability off of higher investment spending this past year and believes its valuation and risk/reward profile now is reasonable enough to warrant a solid entry point for long-term oriented investors.
He notes shares are trading at about 22 times his calendear year 2006 earnings per share estimate for business that should deliver 20% to 25% bottom line growth in the next couple of years.
Cappelli raises fiscal 2005 (ending August) and fiscal 2006 earnings per share estimates to $2.46 and $3.04, respectively. He has a discounted-cash-flow-based target price of $84.