Deutsche Bank equipment analyst Jeffrey Shelton maintained his "sell" rating and $20 price target on Scientific-Atlanta Inc.
Despite a strong fiscal 2004 first quarter, S-A's market valuation remains rich.
In a research report, Shelton commended S-A on its second straight strong quarter in a row: Revenue rose 27% year-over-year, fueled by strong digital set-top shipments.
But S-A's stock valuation — it's trading at about 35 times 2004 earnings per share estimates — "imply a growth trajectory that is likely to be elusive," in Shelton's view.
The analyst said the next several quarters will see additional shipments of digital video recorders and digital set-tops, but "growth prospects thereafter are much less certain, in our opinion."