NEW YORK, Feb 1, 2000 /PRNewswire via COMTEX/ -- This release has been
issued by Deutsche Banc Alex. Brown, a registered broker-dealer and
member of National Association of Securities Dealers, CRD number 2525.
Gary R. Craft, CFA, of Deutche Banc Alex. Brown today published a major
new theme report, "On the Origin and Nature of the Electronic Financial
Marketplace," which explains the shifts taking place toward electronic
marketplaces and the resulting investment opportunities.
The report includes:
-- A definition of an electronic financial marketplace
-- Where the biggest investment opportunities can be found
-- How financial intermediaries likely will be affected
-- Stock recommendations
He estimates annual revenue for each of the four principal market
segments to the electronic financial marketplace to be as follows:
E Brokerage $5 billion
E Banking $12 billion
E Insurance $19 billion
E Payments $9 billion
Late last week, Craft initiated coverage on two securities in the
sector: Knight Trimark (NITE - 31 5/8) with a BUY investment rating on
the shares and CyberSource (CYBS - 35 1/8) with a MARKET PERFORM
investment rating on the shares. Supporting these investment opinions,
Craft draws from the nature of emerging electronic financial
marketplaces, which he defines as:
1. A full supply of liquidity/capacity and unadulterated choice exists
2. Price improvement (more supply at existing prices or a better price)
over physical/legacy world models
3. Timely and responsive information and transaction reporting
4. Tools and information that aid decisions as well as some back office
filtering to assist decision-making
5. Regulatory compliance
6. Fair treatment
7. In cases, a share of the economics
8. Enforcement of rules of behavior by the sponsor
In the equity markets, Craft believes an electronic marketplace already
exists and its name is Knight Trimark. Knight Trimark currently
captures over 20% in NASDAQ trading volume and is arguably the most
important equity exchange outside of the NYSE and NASDAQ. He envisions
significant changes ahead in Knight Trimark's industry and believes
earnings acceleration and multiple expansion are possible for the
company and its shares.
Craft also believes a major market opportunity in Internet payments
reporting and fraud detection favors the shares of CyberSource. Its
payment gateway, fraud control and enhanced reporting services position
it in what he believes is at least a $9 billion annual revenue market
opportunity. His investment rating of MARKET PERFORM reflects
hesitation about the Internet middle-market positioning of CyberSource,
not about its management quality or technology platform. According to
Craft, "The Internet economy could begin to reflect a third-world
country -- an upper class and lower class with nothing in the middle.
As such, CyberSource's model may need to migrate to either a single,
low-cost solution for the top 50-100 Internet merchants, which may
require either alignment with a merchant processor or actual purchase,
or alternatively, the company could move toward a choice-driven model
for the lower tier where CyberSource helps merchants secure merchant
credit accounts and a processing relationship."
For additional information, please contact Gary R. Craft at 415-617-3269.
For additional information on Deutsche Banc Alex. Brown's equity
research, please contact Chris Cortezi at 410-895-3418. |
