Q: At what price does one buy the stock? After issuing a slightly muted forecast, it keeps falling. When does it become a good buy? Is 5i still seeing good things for the company in the future? Has your view been diminished any after their last report?
5i Research Answer:
We remain positive. The company is spending for the future and this is likely the right move to maintain its leadership. Short term investors do not like it, though. Sentiment has shifted, but consensus still calls for VERY strong earnings growth regardless. It is not cheap, but with its industry position and $5.7B cash it has the ability to spend to set up future growth. It is hard to catch a falling knife but we think investors stepping into the decline around $132 to $133 and accumulating will be rewarded, if they have a 2-year+ timeframe.