stockhouse.com
Miami, FL, December 28 /SHfn/ -- PFSWeb [PFSW] ended its quiet period on Monday with a minor "buy" recommendation from a small house, Robert W. Baird & Co. Sometimes, with these B2B stories, you might ask yourself, "Does it really matter what this company does?" Yes, if you plan to become faithfully devoted to the story! In this case, PFSW's strengths are its accounts receivable collections and distribution services for e-commerce companies. Not very sexy, but someone has to fulfill what you order in your "shopping cart." Some of the divisions of IBM [IBM], Hewlett-Packard [HWP], Nokia [NOK], Tektronix [TEK], Thomson Consumer Electronics and others outsource to PFSW to fulfill on such transactions.
Is this company a big deal? We think not. Yes, the company scored Pro Forma FY1999 revenues in excess of $100 million, losing a mere $400K (peanuts when it comes to Internet stocks). That figure is to change, though, because of the way the company counts its revenues from IBM - now switching to measuring with its service fees instead of reselling product inventory and counting that.
The selling point on this one is how few shares are available. PFSW's parent, Daisytek [DZTK], owns about 80% of the shares. The entire management team owns about 4.8% of the shares, aside from options. It doesn't appear that any person or company owns more than 5% of the company, other than DZTK. Our biggest scratch-of-the-head was in trying to decide whether to feature PSFW or DZTK today. DZTK would likely gain as PSFW grows and DZTK shareholders will get a share spin-off sometime in the coming year. DZTK is a wholesale distributor of office and computer products, such as inkjet and toner cartridges. They were providing transactional management and e-commerce logistical solutions, which has now been packaged into and spun off as PFSW.
Mark Layton is CEO of both companies and is on the board of directors of ISA International and uBid and he brought his DZTK colleagues on board for the tracking stock ride. There are a few matches, comparing brokers covering DZTK and PSFW underwriters. Nothing seemed that exciting in coverage DZTK had gotten from Hambrecht & Quist. One finds Robert W. Baird covering both DZTK and PFSW. One might hope Robinson-Humphrey and H&Q jump aboard with something better than a "market perform".
Unless a significant development arises, we believe PFSW is a short-term trading opportunity with only minor long-term attraction.
TECHNICAL EVALUATION
Monday was the first positive crossover of the significant exponential moving average lines with a correspondent strong price rise. The weekly chart shows a triple bottom in five trading weeks and a pierce of the mid-point resistance line of Week #2's bearish candle. The MACD has given its positive crossover blessing at the bottom of its chart. Near-term resistance points are at $41 and $45/share. If PSFW trades through $48/share, then it would likely test its previous high of $52-11/16 per share. If there were any serious market declines, PFSW might still climb higher, but we believe it would not break below its $35-7/8 support level in the near future. |
