Analysts Aren't Worried. I agree Sleeper. Just found this analyst report from CIBC day before yesterday. Thought I would share it with the string. Interesting stuff - looks like an amazing buying opportunity!
Here is an excerpt from the report:
Investment Conclusion
We reiterate our Strong Buy rating on Data
Rating: STRONG BUY
Return. We believe the recent weakness in
the stock presents an excellent buying
opportunity, and we reiterate our $125 price
We believe recent investor fears about the hosting market related to the announcement that Qwest and IBM had entered into a hosting partnership--are overblown. In our view, this is not a major negative development for the hosting specialists in general, nor for Data Return specifically.
Qwest and IBM are both already active and
aggressive in the hosting business, so this
Earnings per Share
is not unexpected. Qwest had previously detailed its plans to build 2 million square feet of data center space, and it already has a partnership with KPMG for IT-services expertise. With its large and diverse IBM
Global Services business, IBM is already one
of the world's biggest hosters on a revenue basis. In the larger view, we believe hosting providers Data Return, Digex, Exodus, Navisite--will carve out a large
piece of the website and application hosting
market as it grows to an estimated $30
billion over the next four years. We
believe that facilities-based telco's also have a stake in this market, but their ability to use their facilities to their advantage is limited.
Data Return has a particularly
differentiated market position by focusing
exclusively on Microsoft-based hosting and
going deeper than any other vendor with its
offering on that platform. For instance, it
has already standardized on Windows2000 and
is hosting some sites for Microsoft itself.
With respect to the Qwest/IBM announcement,
we note that it is unlikely that this vendor
combination would produce a
comparable focused offering on the Microsoft platform. We believe Data Return
also recently won some contracts for the hosting of sites developed by IBM's
services groups because of its leadership on Microsoft hosting.
Business continues to be very strong for Data Return, and we anticipate
stellar F4Q99 (March) results. We would use the recent weakness in shares as
a buying opportunity and reiterate our Strong Buy rating. |
