Favorable write up on NPNT by First Call:Top Pick for 2000; Reiterate Strong Buy (1)
Rating: Strong Buy (1)
Key Points - THINGS TO EXPECT IN 2000
-- Emphasis will shift from business DSL to consumer DSL
-- As Baby Bells enter long-distance(LD), LD carriers will turn to DSL carriers
to attack local markets
-- DSL will migrate from data-only product to content-rich digital conduit
simultaneously supporting voice, data and video
-- DSL carriers will partner with content delivery providers to form end-to-end
broadband networks that bypass congested public Internet
-- 1999 was year of building; 2000 is all about accumulating subscribers and
evolving DSL into the alternative access solution of the future for converged
voice, data and video
-- $250M credit facility results in 4Q EPS accounting adjustment
-- Reiterate Strong Buy (1), 93% upside to price target.
TOP PICK FOR 2000
NorthPoint (NPNT--$24.50)
Rated-Strong Buy
Today, only 5% of the 170 million analog telephone lines nationwide have been
upgraded to digital. DSL-pioneer Covad has emerged as the leading DSL provider,
but we consider NorthPoint a solid #2 player that has largely been overlooked by
Wall Street. It experienced growing pains as it expanded from 70-employees to
over 700 in a two-year period. Demand for its high-speed Internet access
outstripped short-term capacity early last summer. We believe NorthPoint now has
the right systems, people and alliances in place to greatly accelerate
deployment in 2000. Within the last two months, NorthPoint has quietly inked
deals with Yahoo, GTE, SBC, HSA, Microsoft-Tandy-RadioShack, iBeam, Beyond.com,
Equinix and Intel (g.lite trial). NPNT is run by former MFS/Worldcom executives
and backed by Paul Allen's Vulcan Ventures. We consider NorthPoint one of our
top picks for 2000 given its attractive valuation with the stock trading near
its spring IPO price of $24 and strong relationships with Microsoft, Intel,
Excite@Home, Verio, Level 3 and Global Crossing, among others. Over the next
five years, we look for revenues to rapidly expand from $20M to over $1B as
NorthPoint helps over 150 ISPs, CLECs and IXCs bring broadband access to the
masses. By the end of 2000, NorthPoint's broadband access network will cover 45%
of the homes and businesses in the United States.
INVESTMENT CONCLUSION
We believe 2000 will be a banner year for NorthPoint given the heightened
consumer awareness of DSL, a favorable line sharing ruling that opens up the
mass markets to the Data-CLEC competitors and the recent
Microsoft-Tandy(RadioShack) deal.
We consider NorthPoint to be a leading broadband access provider with the second
largest footprint in the U.S. covering over 22 million homes, which is more
than 2x the number of homes that the leading ILECs (SBC and US WEST) are capable
of servicing.
The material contained herein is based on data from sources considered reliable,
but we do not guarantee its accuracy and do not purport it to be complete. This
information is not intended to be used as the primary basis of investment
decisions nor, because of individual client requirements, should it be construed
as a representation by us or as an offer or the solicitation of an offer to
sell or buy this security. Any opinions expressed are subject to change. From
time to time, this firm or individuals associated with it may have a position in
the securities mentioned and may make purchased and/or sales of those
securities in the open market or otherwise.
First Call Corporation, a Thomson Financial company.
All rights reserved. 888.558.2500
Jan-05-2000 19:48 GMT
Symbols:
US;NPNT
Source FC First Call |
