Now is the Time to Buy DGM for 2007

123etc, £38m/10p is an interesting target!
A couple of possible scenarios:
1. In their trading update promised for early new year, DGM decide to promise nothing that is not nailed down, and stick to £1.2m PBT projection for 2007, then the prospective p/e is also likely to stay at the lowish end, at say 15x = cap of £18m/5p roughly.
2. They feel a bit more bullish, and wish to attract a replacement for Amvescap, so they announce slightly better t/o, and possibly smaller loss,in 2006 than expected; they also up the 2007 projection to say £2m PBT, and the city will probably look at a prospective p/e of say 19x.That gives you a cap/shareprice of £38m/10p. However, IMHO, we will not see any rush up to that figure until later in the year, but I would expect something like 6-7p quite quickly. (i.e. 2x current price)
A lot hinges on what Porter and Moss actually say, probably in January; my guess is that it will be a lot closer to scenario 2, than scenario 1, especially if t/o figures for 2006 have exceeded expectations, as rumours seem to suggest they have.
Happy New Year, chaps.