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Laura Martin Case Study

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Laura Martin case study

Question 1- Laura Martin says she gets "paid to talk" - to whom is she talking?
Answer: Laura Martin is talking with investors. She would meet with many company representatives including the CEO, CFO, operating division chiefs and head of investor relations. She is in connections with these investors via telephone, fax, voice mail or email. It is approximately 900 individual per month.

Question 2- Given this crazy web of relationships, what are Martin's incentives? Can she anger the people who provide her information? What happens if she makes negative comments? Positive comments? When and how might she try to stand out from other analysts?
Answer:

Question 3- What is happening to the role Martin plays …show more content…

• In particular, the EBIDTA figure inflates the earning of the firm, as it ignores “all the bad stuff” in its abbreviation. Furthermore, it is a pro forma figure which is very vulnerable to accounting manipulation.

Question 7- Do you agree with her interpretation of the regression analysis?
Answer:

Question 8- How reasonable are Martin's forecasts for EBITDA and her assumptions about the asset intensity of the business?
Answer: EBIDTA figure inflates the earning of the firm, as it ignores “all the bad stuff” in its abbreviation. Furthermore, it is a pro forma figure which is very vulnerable to accounting manipulation. Martin’s target price was $50 and her projections for EBITDA were realized. According to her analysis Cox traded at 13.3X EBITDA, and Martin’ s target price would translate into a 20.9X.

Question 9- How plausible is Martin's terminal value multiple?
Answer:
Question 10- Why is Martin pushing real options valuation as an alternative to DCF analysis?
Answer:
Question 11- What is the analogy Martin is trying to draw with options? What is the "stealth tier"? What is the unit of analysis? What is the underlying asset price? Strike price? Volatility?
Answer: Laura Martin felt, and with reason that the EBITDA multiplier and the DCF analysis did not account for this possible revenue stream which she named “Stealth

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