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August 30, 2000 07:53
CSFB Cuts 5 Internet Services Stocks; Many 'Dead Money' (MMPT)
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(NewsTraders.com)--Remarking that the "dot.com demise" mixed with the usual third-quarter seasonality has created a "more languid environment," Credit Suisse First Boston analyst Mark Wolfenberger downgraded a slew of Internet professional services stocks, predicting that many names in the sector could become "dead money."
Several variables are creating an environment of malaise, such as customer worries about a slowing economy, post-Y2K budgets, large dollar and integration decisions, and the new ASP/hosting option, Wolfenberger said.
Most names could remain inexpensive based on price-to-earnings valuation but will likely remain dead money until their performance can once again exceed guidance, the analyst predicted.
To reflect these issues, Wolfenberger downgraded the following companies to "buy" from "strong buy":
--Modem Media (MMPT), price target lowered to $16.
--Rare Medium Group (RRRR), objective cut to $18.
--Viant Corp. (VIAN), goal reduced to $25.
In addition, the analyst lowered his ratings on both Cambridge Technology Partners (CATP) and iGate Capital (IGTE) to "hold" from "buy."
Although he kept Lante Corp. (LNTE) fairly high on the investment rating scale with a "buy" recommendation, he slashed his price target on the stock to $15 from $60.
Wolfenberger noted that these downward ratings should have little oppressive effect on the companies' stock prices given the already-low valuations for the group, which he said is still growing its top line numbers by 40% or 50%.
However, he believes that "low investor mindshare will render these stocks dead money until estimates align themselves with the current, more normalized environment."
On a less funereal note, he remained bullish on several concerns, reiterating his top-tier "strong buy" ratings on Sapient (SAPE), Razorfish (RAZF), eLoyalty (ELOY) and FirstMarch (MRCH).
Copyright 2000 NewsTraders Inc. All Rights Reserved 09:39 Wednesday, August 30, 2000 |
