Q: First…. Thanks for getting me into this stock. I am currently looking to add to it at around $33. On my Direct Investing site PRL is considered to be undervalued with a FAIR VALUE of $222. Would you please clarify what this means. I gather it is based on earnings growth. But does this mean $222 TODAY? Or $222 in the future for example 1 year,3 years, 5 years? Thanks.
5i Research Answer:
This question is really better directed to Direct Investing. Many sites use a 'Black Box' methodology and punch in data without any subjective input. PRL is growing fast, but we do not think any analyst out there thinks it is going to increase 7-fold any time soon. The sector does not tend to get a high valuation, so such a gain would need to be driven by per-share earnings growth. But, as a company grows, it is harder to maintain the same level of growth. We think over a few years PRL has the potential to double, but in no way would we put a $222 target on it.