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1-11-2006 ORCT - Orckit Communications Ltd.

CURRENT PRICE: $26.89 ($5.60)

TYPE OF PLAY: TECHNICAL ANALYSIS/VALUE/EARNINGS GROWTH

Orckit Communications Ltd. is a leading provider of advanced telecom equipment targeting high capacity packetized broadband services. Orckit is engaged in the development of new telecom products technologies targeting packetized services offered in metro and access networks. Compared to others in this industry we feel like ORCT is not only undervalued, but experiencing the type of growth that its peers are not. Their main subsidiary Corrigent Systems was also recently been selected to be deployed by WilTel Communications, which operates a nationwide fiber-optic network. Aside from this, we believe that the chart technicals show that it is poised to break out. For 2005, Orckit expects revenues of approximately $100.0 million and net income of approximately $21.5 million, or $1.25 per diluted share. With them recently reaffirming guidance, this number looks to be a lock. For 2006 they are expecting earnings to grow 20% (or 35% if you factor out last years capital gain). The current trailing P/E is ~ 21, looking forward, using their guidance of 20% EPS growth, the forward P/E is only ~ 18. We believe that a 35%(excluding charges) year over year growth company deserves a higher multiple. We will also be tracking the ORCT June 25 call options QEOFE.

LINKS FOR FURTHER READING:
Corrigent Systems Homepage
ORCT homepage
SEC filings for ORCT
General ORCT statistics