From Robertson/Stephens Web Report...
eFinance Outlook -- Scott Appleby - scott@rsco.com
RECORDS FALL AS VOLATILITY = VOLUME
Stock market volatility spiked trading volume this week. On Tuesday, 2.8
billion shares were traded on Nasdaq, a 77% increase over average daily
volume for the March quarter. This new one-day record leaves the previous
record, the 2.19 billion shares of March 1, far behind. Nevertheless, March
volume set a monthly record with 41.6 billion, outpacing February by 20%.
March quarter volume reached 108 billion shares, 36% beyond the December
quarter's 82 billion. However, average weekly Nasdaq volume for the last
three weeks of the March quarter came in at 7 billion, a 13% decline from
the 7.9-billion average for the period's first 10 weeks.
UPSIDE EXPECTED TO EBROKER PROJECTIONS
We continue to like the leaders of the eBrokerage space and reiterate our
Buy ratings on E*Trade (EGRP $24-3/8), Ameritrade (AMTD $18-5/8) and
Knight/Trimark (NITE $45-15/16) as we expect them to surpass our EPS and
revenue estimates.
* E*Trade, our favorite eBroker, recently unveiled its E*Trade Bank
and Card Capture Services acquisition, positioning it as the first
Financial Services Portal with offline presence. We believe this model will
provide great cross-selling opportunities and enhance the strength of
E*Trade's brand. We feel confident that E*Trade will beat our EPS estimates
of ($0.16) for the quarter and ($0.36) for the fiscal year as well as our
revenue estimates of $330 million for the quarter and $1.261 billion for
the year.
* Ameritrade leads the industry with projected account growth of 119%
from 560,000 in fiscal 1999 to 1,227,000 in 2000, more than double the
industry average. We believe Ameritrade's quarterly acquisition cost per
net new account will plummet to $230 from $466 for the period ending in
March. We expect Ameritrade to exceed our EPS estimates of ($0.02) for the
quarter and ($0.09) for the fiscal year, as well as our revenue forecasts
of $163 million and $585 million for the year.
* Knight/Trimark remains the dominant Nasdaq market maker and
positioned best, we believe, to control an increasing share of the world's
stock and options trading. We remain very confident of our estimates for
the quarter and the year: EPS of $0.90 and $2.61 and revenue of $460
million and $1.454 billion.
Also...
TAKING STOCK OF A CORRECTION
Investors in the New Economy took a wild ride this week, with Nasdaq giving
back much of the gains it had achieved this year; as of Thursday's close,
the index is down 16.9% from its 52-week high and up 4.9% year-to-date.
Many bears saw the sell-off in technology and Internet stocks as validation
that the New Economy was an inappropriate investment arena all along--lots
of commentary about bubbles bursting and those omnipresent tulip analogies.
While the deterioration of market capitalization has been nothing short of
extreme for most Internet companies, we maintain that investors should have
selective exposure to this increasingly important group. The Internet
platform now touches nearly all aspects of the economy and the stock market
and promises to transform the way we all do business. However, this
platform, and therefore most of the companies attempting to leverage its
power, are still quite young. It is this early stage of development
combined with investors' need to make long-term assumptions about the
growth prospects and execution abilities of each company that magnifies
stock price volatility.
This ever-changing landscape has also been impacted by the relentless
proliferation of competition, fueled largely by seemingly unlimited access
to capital. We look for companies that have built leadership positions in
their fields and are addressing open-ended opportunities, companies with
effective management teams and proven execution skills. Given the sweeping
economic, cultural and social changes we see being driven by the Internet,
we anticipate that numerous companies we cover will thrive even amid such
volatility and achieve enduring status as vehicles for building long-term
shareholder wealth.
We believe this group includes, but is certainly not limited to,
Amazon.com, America Online, CMGI, Doubleclick, eBay, eBenX, E*Trade,
Gemstar, Healtheon/WebMD (HLTH $21-11/16), InfoSpace, Insweb, Internet
Capital Group, MarchFirst (MRCH $30-7/16), Priceline.com and Yahoo! (Of
course, each contributor to the Web Report has a list of attractive
investment ideas.) While each investor should assess his or her own
appetite (or stomach) for the volatility that's characteristic of Internet
investing, we view these as a basket of core holdings that can be used as a
shopping list during market corrections. |
