Syneron Medical Ltd. (ELOS)

MJKscorecard (52.37) Submitted: 11/12/07 10:19 PM : Start Price: $18.32 ELOS Score: -17.23

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=22695&t=01001553657265128043

“Cellulite describes a condition that occurs in men and women where the skin of the lower limbs, abdomen, and pelvic region becomes dimpled after puberty… Descriptive names for cellulite include orange peel syndrome, cottage cheese skin, the mattress phenomenon, and hail damage.” – Wikipedia –

Appetizing isn’t it? As the ultimate end user this is why I love Synernon, the only FDA approved cellulite treatment that women around the world are quickly discovering. Like a beautiful dress in the window that brings shoppers into the stores, Synernon’s cellulite reduction therapy has introduced customers to the other patented ELOS treatments for skin tightening, skin rejuvenation, hair removal, leg veins and vascular reduction, acne care, and other similar non invasive skin treatments.

So they offer us the fountain of youth, but why invest?

- 76% average revenue growth over the last 5 years

- 50M share repurchase recently announced

- Proctor and Gamble partnership with the capability to excel growth to a new level- 37M owner earnings

- 90M+ in cash and short term investments

- International company with nearly half of its revenues coming from outside the US

With MJAscorecard’s Gigamedia (GIGM) owner earnings analysis as an example, I’m taking a shot at estimating a future price of Synernon. I am estimating owner earnings of 37M and assuming that the market will bare 10X owner earnings if growth rates are 10%, 15X for 15% growth and so forth. After trading down to $17.14 from an all time high of nearly $45 the market is paying just shy of 13X owner earnings today.

..............................................Owner Earnings........Implied..........Compound
Current........Hypothetical..........in 5 years..........Stock Price......Annual Stock
Stock Price....Growth Rate.......(in $ millions)........in 5 years..........Returns
============================================================
...$17.14............10.0%................$59.6..................$21.28................4.42%
...$17.14............15.0%................$74.4..................$39.87..............18.39%
...$17.14............20.0%................$92.1..................$65.76..............30.86%
...$17.14............25.0%................$112.9................$100.82.............42.53%
...$17.14............30.0%................$137.4................$147.19.............53.74%
...$17.14............35.0%................$165.9................$207.39.............64.65%
...$17.14............40.0%................$199.0................$284.28.............75.37%

Now that is an appetizing return.

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