Unterberg: Orckit's decline is buying opportunity
"KDDI, Orckit's largest customer, continues to spend aggressively."
Globes correspondent 7 Feb 06 19:24
CE Unterberg, Towbin analyst Rich Church advises investors to take advantage of the recent weakness in Israeli company Orckit Communications (Nasdaq: ORCT ; TASE: ORCT).
"In recent days, the stock has declined from $31 to $25, about 19%. While the stock is highly volatile and speculative, we believe the pullback presents a buying opportunity," Church's report says.
"We believe weakness may be related to concerns over capital spending trends in Japan…
"…Our checks indicate that KDDI, ORCT's largest customer, continues to spend aggressively. KDDI yesterday said it planned to obtain a controlling stake in Japan Cablenet, Japan's second largest cable TV company with about 500,000 cable TV subscribers. KDDI said it plans to offer one-stop mobile phone, Internet, and video services to the customer base. We believe this would benefit ORCT, as KDDI's converged network is based on ORCT CN-100 product.
"Valuation remains attractive at 17x our 2006 EPS estimate of $1.49, or 15x, adjusting for cash/interest. The company has $5.92 per share of net cash on the balance sheet."
Published by Globes [online], Israel business news - www.globes.co.il - on February 7, 2006
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