Bear Stearns Comments -
Viant (VIAN - $3713/16)
Attractive Initiate Coverage
We initiated coverage on VIAN with an Attractive. VIAN is a leading pure-play DPS firm serving a select group of Global 1000 and dot-com clients. VIAN provides a full spectrum of digital professional services with expertise in business strategy, creative design, and technology. We believe VIAN is positioned in the "sweet spot" of the DPS market, with a differentiated strategic focus leading to building unique digital solutions for its clients. We believe VIAN has created a competitive advantage through its leverageable project management and delivery capabilities and expertise. VIAN ranks No. 1 in realized average bill rate, at $263 per hour and is an industry leader based on annualized revenue/billable, at $364,000 in Q1. VIAN has achieved superior top-line growth. For Q1, VIAN achieved a sequential growth rate of 29%, slightly above the industry average, and an EBIT margin of 11%. VIAN has grown aggressively over the past several quarters, achieving year-over-year top-line growth of more than 200% during 1999, all organically. Growth prospects continue to look strong for the next several quarters, with revenue visibility for Q3 and Q4 of 80% and 50%, respectively. Management has an objective to achieve an operating margin of at least 15% within 15-24 months. VIAN has built a solid growth engine, and we expect top-line organic growth in the range of 40%-50% over the next several years. From a gross margin perspective, we are confident VIAN will be able to consistently achieve results in the mid- to high 50s. We also anticipate VIAN will begin to realize further operating leverage in the business and will achieve operating margins of 12% for 2001
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