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20:55 Thursday | October 19, 2000 Terayon is a Buy, says Lehman Brothers, an hour before the stock plunged 51% 19.10.2000 | 11:32 Udi Ben-Shach Terayon Communication Systems (Nasdaq:TERN) took a terrible beating on Wednesday on Nasdaq, losing more than 50% of its value. Embarrassingly enough, a mere hour before the bear attack, Lehman Brothers (NYSE:LEH) decreed the stock a good buy. Lehman Brothers rated the Israeli company a Buy and set its price target at $165. However sensible that may have seemed before trade began, last night`s session must have been a huge embarrassment to the investment bank`s analysts Steven Levy and Andrea Green. Within moments of opening Terayon was in the fast lane south. It closed the session down more than 51%, from $40 to $19.9. In other words, the price target set by Lehman Brothers is a cool 700% above its market value. Yes, we beat expectations. But… The Buy recommendation was based on Terayon`s third-quarter results, announced Wednesday night, which beat analyst expectations. Terayon`s revenues for the third quarter of 2000 came to $125 million, compared with Lehman`s expectations of $108 million. Its earnings per share came to 12 cents, beating forecasts by 4 cents. "We believe Terayon is going to continue to see strong demand for its products and are comfortable raising our expectations for the base business," Green and Levy wrote. They nudged up their fourth-quarter 2000 revenue forecasts from $126 million to $130 million, and boosted their revenue forecast for the whole of 2000 from $640 million to $685 million. What Lehman couldn`t factor in were some things said in the conference call that Terayon`s CEO, former Israeli Zaki Rakib, held with analysts before trade began yesterday. Rakib waxed conservative about the foreseeable future, mainly the fourth quarter. Terayon`s executive hinted during the conference call that analysts may have been a tad lavish when calculating their revenues forecasts, based on the company`s back orders for the fourth quarter. Investors did not dither. It should be noted that Levy and Green did warn that revenues might weaken in the fourth quarter. They even lowered their earnings forecasts for that quarter, cutting projected Q4 earnings per share from 11 cents to 6 cents, and their EPS forecast for the whole of 2000 from 43 cents to 40 cents. Although Levy and Green were not caught on the fourth quarter, the timing of their analysis on Terayon, moments before its share crashed, was truly unfortunate. Santa Clara, California-based Terayon designs broadband networking solutions for advanced broadband voice, video and data services. |
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| aus der Diskussion: | Markus Frick mein Werdegang |
| Autor (Datum des Eintrages): | titian (06.11.00 01:30:25) |
| Beitrag: | 3 von 3 (ID:2270235) |
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