APAC--from a 3 to a 1 at Lehman
<<APAC Cust. Svc(APAC) 1-Buy J. Kessler, (212)526-5162
Upgrade to 1-Buy; Business Model Now (A,C)
Shows Results, I/II
OLD NEW STREET P/E
Price: $7 3/16 EPS 1999 0.22 0.20 0.20 36.8 X
52 Wk Ra: 7.50-2.19 EPS 2000 0.35 0.32 0.33 22.6 X
Mkt Cap: 358.06 Mil. EPS 2001 N/A N/A 0.00 N/A
FY: DEC Price Target 10 14
Rank 3 1
* We are upgrading APAC Customer Service to a 1-Buy from a 3-Hold, with a
price target of $12-14. As detailed in our three recent notes, APAC
appears to be successfully executing on its business strategy to build
its already successful inbound business (65% of forward sales), while
taking out capacity, creating performance-based margins, and, finally,
turning profits in its older outbound business (35% of sales).
* Meanwhile, like few other customer care companies, APAC has developed an
internet-based help platform which will service customers in an
interactive format. We see APAC becoming a leading e-commerce customer
service company.
* APAC has had an impressive run in garnering new, marquee customers for
its inbound business, including UPS, Merck, MCIWorldcom, and General
Electric.
* Although APAC still has work to do in its outbound business, we see the
potential for upside surprises in earnings as greater than at any time
in the last three years. The market may begin to value the company
based on what should be a long-term 25% EPS growth rate and new e-
commerce customer care.
* *Includes $14MM of non-cash losses from discontinued ops. in 1999 and
$7MM of non cash losses from discontinued ops in 2000.>> |
