Interliant, soon to be InterGIANT? Scott Greenberg
Interliant NASDAQ:INIT
Technology
Quote | News | Snapshot | Charts | SEC | Ratings
Feb 18 2000 Back on December 9th, we recommended buying Interliant (Nasdaq: INIT) at $25 and to look for the relatively undervalued company to double. Well, yesterday it closed at $51 11/16 and officially reported 58% sequential growth in quarterly revenues to $19 million. We knew the market would come to see its value, just not so soon. Its price to sales ratio, 48.9 is still considerably less than its main competitor Exodus communications (Nasdaq: EXDS) at 82.5, but is now much closer to Digex Incorporated (Nasdaq: DIGX) at 53.3.
The company has made a number of major announcements since year-end. Three major strategic partners, Dell (Nasdaq: DELL), BMC Software (Nasdaq: BMCS) and Network Solutions (Nasdaq: NSOL)have made investments in Interliant common stock totaling $27.5 million. It has strategic alliances with these companies under which it will leverage each other's technology and expertise to bring advanced Web-based products and services to market.
The company recently completed a Regulation 144A offering of $150 million of 7% convertible subordinated notes due 2005. These financings should provide adequate capital to fund its growth and to launch a number of new initiatives in the coming months.
Interliant also appointed a new CEO, Herb Hriber. He has over 25 years of experience in the Telecommunications and Internet sectors. Mr. Hriber was most recently COO and President of Verio (Nasdaq: VRIO).
Interliant is well positioned and we whole-heartedly approve of the hiring of Mr. Hriber, yet revenue visibility is low and increased competition could bring increased compression of its margins, especially as its revenue mix leans more towards the slimmer margined area of professional services.
From a technical perspective, there is little overhead resistance, yet the graph may be forming a near-term double top. Most of the indicators though point to a continued bullish outlook, with the stochastic, directional movement indicator and slow moving-average convergence-divergence all in bullish territory.
We continue to rate Interliant a buy, but would not be surprised by a short-term pull back after this recent doubling.
streetadvisor.com |
