Briefing Trader's Edge:
Time to put some IRA money to work.
Trading Points
Evoke Communications (EVOK 5 1/32) is a provider of Internet communication services that allow users to communicate and exchange voice, video and visuals in a simple, cost-effective manner through web-based applications and technologies. Evoke Webconferencing enables users to instantly establish a web conference without operator intervention, join participants on the phone and web to share visuals and present an event as a live or recorded web cast.
The recent IPO has fallen sharply from its offering price. In our opinion, the stock simply suffers from a lack of visibility in an overcrowded market for new offerings.
EVOK's story as a compelling investment candidate is a simple one. As a recent IPO, the stock has a small float (7 mln shares). The company's lock-up period will not expire until early-2001. This means that rally attempts will not have the potential of being blocked by insiders using the liquidity as an opportunity to diversify their portfolio. When the year-end rally that many are anticipating occurs, sustainable businesses that can be bought for under $10 per share will be in high demand.
As the issue now trades almost 40% below its $8 initial public offering price, you can also expect ratings to be strong across the board when analysts begin to initiate coverage, creating a near-term catalyst. Price targets should be even more bullish, likely falling in the $10-$12 range. Company was taken public by a relatively strong underwriting team consisting of Salomon Smith Barney, Robertson Stephens, Thomas Weisel Partners and CIBC World Markets.
Last week, company announced an agreement for Evoke Communications to be the provider of Webconferencing and multipoint voice chat on the Lycos Network. Stock failed to rally on the news, suggesting that investors who were taken under water by EVOK's decline from its offering price used the announcement as an opportunity to cut their losses. Heavy volume that day of 1.9 mln shares (vs 0.3 mln the day before) would seem to support this theory.
Stock has established temporary support at $4 13/16 (all-time low). First major resistance comes in at $5 1/2. However, key to a breakout is the $6 area. Our six month target on EVOK is $11, implying upside of 119%. |
