SenoRx, Inc. (NASDAQ:SENO)

TMFUltraLong (99.96) Submitted: 12/30/2009 2:00:58 AM : Start Price: $7.93 SENO Score: +11.46

SenoRx recently moved up significantly on news that it was cleared on a patent infringement suit. I do think this company has significant potential in the long-run as is evidenced by their 15% historical growth rate, their solid cash position and their hurdling of this patent lawsuit.

I do however feel that the company has considerably overstepped its bounds in terms of current valuation. I simply can't stand behind a company that will not consistently turn a profit until late 2010/early 2011 that is already trading at nearly 5 times book. Even looking out to 2012 I would say they can hope for at best 18-21 cents per share in earnings for a 2012 forward p/e of about 37-42 based on its current price. A 2010 PEG from these guys at 2 to 2.5 would be hard to swallow but when the expectation of 2-2.5 is from 2012 its even harder.

I'm going to be looking at a healthy pullback here. The news is solid, but a realistic valuation here would be between 5.50-6.25 and I think that may even be pushing it.

UltraLong