- ThinkEquity is calling for a trading opportunity in Optimal Group (NASDAQ:OPMR) noting they believe that the risk for Optimal if adverse online gaming legislation passes is overly discounted. Furthermore, they believe the odds of passage during this congressional session are extremely low given the calendar and legislative priorities. Accordingly, the firm suspects a near-term trading opportunity may be upon us. Remains attracted to the FireOne business, which drives the significant majority of Optimal's profits and cash flow. Firm anticipates relatively in-line earnings but have less conviction regarding their revenue assumption. However, the legislative overhang, which may soon subside, and valuation considerations trump near-term fundamentals, within reason.
With the sharp correction in the shares and the company's strong cash position and free cash flow, they believe it would be prudent for Optimal's Board to consider aggressively increasing its share repurchase authorization. Firm's sensitivity analysis suggests the potential for significant earnings accretion. At the current share price, the repurchase of 5M shares (about 19% of O/S shares) would cost approximately $74M or about 67% of Optimal's available cash, and would be $0.22 accretive, or 14%, relative to FY07 EPS estimate.
Notablecalls: Note that OPMR will release its Q2 results tonight. Still wanna go long?
With the sharp correction in the shares and the company's strong cash position and free cash flow, they believe it would be prudent for Optimal's Board to consider aggressively increasing its share repurchase authorization. Firm's sensitivity analysis suggests the potential for significant earnings accretion. At the current share price, the repurchase of 5M shares (about 19% of O/S shares) would cost approximately $74M or about 67% of Optimal's available cash, and would be $0.22 accretive, or 14%, relative to FY07 EPS estimate.
Notablecalls: Note that OPMR will release its Q2 results tonight. Still wanna go long?
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