Could someone be so kind to post the following FACTS on the Yahoo OMKT board? The retail day traders and paid stock manipulators over there could use a few facts as seen by the pros on Wall St.
Feb 3,2000 Paine Webber Research Note
James Preissler , Internet analyst 212-713-2060
Richard Choe, associate analyst 212-713-2415
Rating: BUY
Key Points:
<< -Open Market reported strong Q4 results with revenue of $25.3 M that was 12% better than our $22.7 M estimate, while EPS of ( $0.07) also beat our ($0.09) estimate due to strong ecommerce related revenue. Furthermore, content revenue was extremely strong at $6.0 M and commerce revenue was robust at $17.8 M.>>
<< - Gross margins of 65.9% were higher than our 63.7% estimate..>>
<<- More importantly, the firm is seeing competitive wins against its competitors due to its open architecture and complete product offering.OMKT closed 51 new enterprise sales in the quarter. Furthermore, 13 joint content and commerce management sales have been made. OMKT has over 90 Commerce Service Providers as ShopSite resellers.>>
<<' we are increasing our revenue estimate for CY'00 , but lower our gross margin numbers due to greater than expected mix of lower margin content related revenues. Our EPS estimates remain the same. we are projecting a loss of $6.9 M or ($0.15) per share on $118 M in revenue for CY '00, up from our previous estimate of $108 M.
However, over the course of CY '00, we expect the combined company to quickly realize operating synergies, and are projecting profitability of $0.02 in Q4 '00. We expect profitability could be a significant milestone for OMKT.>>
<< Management believes the soft launch of Project Gator, its e-marketing product, could take place at the end of Q1 '00 and the full launch in Q2 '00, which could generate significant additional revenue for OMKT.>>
<< We reiterate our BUY rating and raise our price target to $100 from $80 due to more confidence in OMKT's visibility, substantial opportunity in 2000, and based on peer group analysis.>>
more excerpts from detailed notes:
re: Q4 results :
<< ....Cash at the end of Q4 was $32 million. The firm was able to significantly improve DSO to 98 days, down from 113 in Q3 ( DSO = Days Sales Outstanding ). Furthermore, deferred revenues increased slightly to $6.3 million up from $5.9 million q/q. The geographic sales breakdown was 68% Americas, 32% International, which is the historical breakdown. Headcount is at about 465 people and could increase to 500-550 people by the end of 2000. According to management, all salespeople have been cross trained and are selling both Transact and FutureTense's IPS products.>>
re: Project Gator:
<<, OMKT expects the launch of "Project Gator", an e-marketing product to soft launch at the end of Q1....>>
<<.E-marketing products have 3 functions, visitor management - identifying and controlling/personalizing the Web page to the user, recommendation engines - creating rules , collaborative filters, and concept mapping to help determine what is shown, and analysis and reporting - tools to evaluate the success of a promotion/marketing effort. Currently, marketing plans and implementation of the marketing strategies for ecommerce Web sites need cumbersome coordination of both marketing and IT departments. With this new e-marketing product from OMKT, an integrated and open solution could allow a marketing executive to implement a plan or promotion without having to divert/use IT resources and then use tools to gather results and analyze them. "Project Gator" could allow for ecommerce Web sites to take advantage of the interactive and information rich attributes of the Internet.>>
re: Price target:
<< After looking at multiple valuation methods, we reiterate our Buy rating and raise our price target to $100 from $80 due to....>> <<...more importantly, we believe both valuations could be conservative examples as upside to our estimates exists and if OMKT trades more in line with its competitors.>>
<< Using a conservative 25-30x forward revenue multiple ( based on peer comparables as BVSN and VIGN that trade at 70-80x) provides a 12 month price target of approximately $90-100 per share using the 25-30x multiple of 2001 revenue. We believe that if the company continues to execute on track going forward, there could be further upside to OMKT. Using the higher-end of the multiple range for leaders in the ecommerce software industry, or 70-80x forward multiple or revenue, we could arrive at a 12-month price target of $230-275 per share.>>
<< Using another valuation method, our 12-month price target for OMKT is $85-95 , based on 110x ( estimated 2001 Theoretical EPS ( TEPS ). We believe OMKT could have a theoretical normalized net margin of about 20-25% as a mature company. Based on estimated 2001 revenues, OMKT could generate TEPS of $0.75 -.85.>>
re: Risks
- pretty boilerplate "cover your derriere" language,eg. - limited operating history, no operating profits, stock only for high risk tolerant investors, highly competitive and rapidly changing marketplace, ecommerce market is new/unproven, internet stocks have high betas,et,etc..
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