****Some Selected DLJ Comments on E-Loan (7/26/99)...FYI...
<<...E-Loan has built a franchise with high barriers to entry, with its first-mover advantage, strong brand, lender relationships, leading marketing partners and advanced technology. In addition to originating loans for over 70 lenders, E-Loan has the ability to fund its own warehouse lines of credit, reducing the overall cost to the consumer. E-Loan is also the largest online mortgage originator approved to use Fannie Mae's automated underwriting system. E-Loan competes with both traditional brokers who have an online presence and native online providers. Competition from traditional brokers includes Countrywide, Norwest, Wells Fargo, and Bank of America. Although these companies provide funded loans, they don't offer brokered loans or the automated underwriting capabilities of Fannie Mae. More importantly, the traditional brokers don't have the competencies inherent within native Internet companies. Fo instance, Countrywide is the only major lender that enables consumers to apply online, the other sites have some basic information and features, but encourage consumers to phone or visit the local branch. Regarding native Internet mortgage companies, E-Loan competes with the likes of Microsoft's HomeAdvisor, QuickenMortgage, HomeShark, Keystroke, and Mortgage.com. None of these companies have the capabilities to fund their own loans, and only one, Mortgage.com, is approved to employ Fannie Mae's capabilities. In addition, E-Loan could also potentially compete with mortgage portal sites like AOL's Real Estate Main Offfice Channel.
E-Loan has a very Attractive Long-Term Model that is very scaleable.
E-Loan Should be valued As the Category Leader that it is. We are initiating coverage on E-Loan with a 6-12 month target price of $70. We arrive at this valuation through a discounted cash flow valuation which reflects the earnings leverage in its business model...>> |
