By
Rich Smith
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More Articles
October 22, 2010
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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: After initially trading down last night post-earnings, Polycom (Nasdaq: PLCM ) shares popped 10% this morning in response to an analyst upgrade from Wells Fargo.
So What: According to our analyst tracker on Motley Fool CAPS, Wells is one of the better bankers out there -- but it's still only right on its picks about half the time.
Now What: Even Wells admits that Polycom faces stiff competition from the likes of Cisco (Nasdaq: CSCO ) , which just introduced a line of home videoconferencing equipment; Google (Nasdaq: GOOG ) and its new "online phone" function; and of course, the impending IPO of Skype, now spun off from eBay (Nasdaq: EBAY ) . At a price nearly 26 times the size of its annual free cash flow, and a growth rate still stuck in the mid-teens, I wouldn't bet on the house of Wells being right about Polycom.
More likely, investors were right the first time -- and should put Polycom on hold.
Want to put Polycom info on speed-dial? Add it to your watchlist.
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