MORGAN KEEGAN & COMPANY, INC.
RESEARCH NOTES
Current Chg. From
Date: October 9, 1996 Rating: 1-S
Company: AFFINITY TECHNOLOGY GROUP Estimate 1996E ($0.45)
Symbol/Price: AFFI* - $8 1/8 1997E $0.10 $0.50
Rpt. Date Range
Q3: ($0.18) vs. NA 10/25 FC: ($0.10) vs. NA NR
Q4: ($0.20) vs. NA Feb. FC: ($0.06) vs. NA NR
REVISING 1997 EPS ESTIMATES
Based in Columbia, South Carolina, Affinity has developed a
proprietary closed-loop automated lending system, the
Decisys/RT system, that electronically consummates and
processes consumer loans.
We have pushed out our expectations of the company's product
delivery schedule 3-4 months:
We expect credit cards, checking account applications, and
joint loans to complete beta testing in the next 10 days.
A mortgage loan product will be demonstrated at the end of
the month.
The auto loan product should be completed by the end of the
year.
Because of the revised delivery schedule, profitability
could be delayed from an original expectation of the end of
Q2:97 until Q3 or Q4. Therefore, we are lowering our 1997
EPS estimate from $0.50 to $0.10. Depending upon order
flow, product delivery, and revenue recognition methods, EPS
in 1997 could be anywhere from $0.10 to $0.80.
The investor conferences and expected announcements are
behind us. We are unaware of any impending news from
Affinity in the near term, although there could be
announcements.
We would remind investors that the shares of this company
have been extremely volatile over the past two weeks, and
are likely subject to continued volatility. Since 9/24/96,
the trading volume in this security (5.3 million shares)
has roughly equaled its float. Our rating is based on our
belief that Affinity's services and products will gain
acceptance by the banking community. Future earnings
visibility is highly uncertain and dependent upon Affinity's
ability to attract significant new orders for its products
and to improve gross margins on its ALMs. The delay in
profitability in this company is due almost entirely to
developing additional product delivery channels to enhance
its revenue potential.
At this point our rating remains unchanged.
Thomas S. Underwood / John B. Moore, Jr.
(901) 579-4565 / (901) 579-4901
* Morgan Keegan & Company, Inc. makes a market in the
shares of this security.
First Call Corporation - all rights reserved. 617/345-2500
END OF NOTE
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