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Most Recent Stock Pick: Leitch Technology Corporation

Leitch Technology Corporation

http://www.leitch.com

Company Info:
Designs, manufactures, and markets electronic equipment that is used to distribute, process and switch high-quality video and audio signals required by television broadcast facilities, independent production or post-production studios and telecommunication service providers.
Equity Statistics: (TSE: Symbol LTV)

52 Week High:         $45.00            52 Week Low: $22.25

Shares Outstanding: 26,007,006 (excluding share buyback program to end June 21/1999)

Revisied Buy Price (May 1999): $22-$26 (Jul98: $23-25.50; Dec98: $33-35)

Target Price: $45                           Minimum Holding Period: 8-24 months

The company warned that fourth quarter earnings will not meet expectations. The stock fell to near its 52 week low on Monday May 10th 1999, but I expect earnings to only accelerate in the next several quarters for the following reason:Customers were delaying their purchasing decisitions until after the National Association of Broadcasters' convention at the end of April. Potential sales, looking forward, have therefore not been priced into the stock. Market Analysis is therefore unchanging its target price for Leitch Technology Corp.
Reason for Coverage:     Price of shares were reduced as a result of unexpected lower earnings reported last quarter, due to delays in the implementation of HDTV. However, the fundamentals of the company remain strong. As a result of a recent selloff that began ahead of its financial results for the year ending April 30, 1998, fundamentals, not anticipation, are determining the value of the stock. Anxious investors have been removed from the equation and patient investors who are confident that digital broadcasting will materialize, will be rewarded well. Volatility for the stock is now lower relative to other technology companies. There is strong support for the stock in the low to mid 20 dollar price range, and a MACD analysis shows that the company is in the start of a steady bull phase. This phase could have resulted from investors realizing resistance at the $23 level, and that the benefits of investing in a well valued company outweigh any signifant risks.

Market Analysis chooses to initiate coverage of this stock with a BUY recommendation.
The BULLish Point:
Implementation of HDTV in the U.S. and Canada will result in greater profitability for the company
The interest of Microsoft in enhanced TV suggests that the infrastructure of cable TV is in need of an upgrade
The Hungry BEARS:
Slow implementation of HDTV in the US will hinder the growth of company in the short term
Continued declines in earnings as a result of this delay could provide more fuel for the hungry bears

 
Chris Lau's Final Word: The information age has already been established, with the cable and telephone infrastructure a means of providing the transport of this information. The next logical step is improving the ability to transport information with better quality and greater efficiency. Market Analysis believes that the demand for higher quality television will continue to grow and develop. The continued committment of Leitch Technology in digital broadcasting is reflected by its increase in investments in research and development.

The efficiency of data transport is based on minimizing volume of transfer, and is accomplished by using data compression ("MPEG") for audio and video data. A consequence of efficiency is quality - digital technology. The greatest value of Leitch is in the sales of equipment that converts analogue to digital signals, which, when fully realized, will benefit long term and patient shareholders.
The information contained in this report is based on sources believed to be reliable, but cannot be represented as fully accurate or complete. The opinions and position can be changed at any time, for which members of Market Analysis will be informed.