From Briefing:
DOUBLECLICK INC (DCLK) 35 1/2 +1/2. DCLK shares have been all over the screen this morning, opening the session almost two points higher, then preceding to retreat 3 points from their intraday high. Why the volatility? Well first, this is an Internet stock -- such intraday volatility is the norm. However, there is a little more to this story. This morning, when Goldman Sachs (lead underwriter of the company's Feb. 20 IPO) initiated coverage of the shares with a less-than-enthusiastic "outperform" rating, investors were left scratching their heads. On one hand, the firm says it believes the Internet advertising solutions company could enjoy the same type of success as Internet leaders Yahoo! and Excite. On the other, Goldman is indicating that the shares are already pretty close to fair-value after being publicly-traded for just one month. What gives this impression. First is the firm's initial "outperform" rating. Come on, this is the underwriter. When these guys have a chance to pump a high-profile stock they usually take advantage of it. Take BT. Alex. Brown for example. This morning, the firm initiated coverage with "buy" rating. Yet, Goldman has started coverage with not its highest rating, nor its second or third highest ratings. Also leaving a little something to be desired is the firm's 12-18 month price target of $43 a share, which DCLK shares currently sit only 21% from. Well, Yahoo! appreciated 500% in 1997 alone. The point is not to beat the analyst upside the head with his investment view. If anything, investors should be taking the investment rating and the price-target as warning that not even the company's underwriters see much upside left in these shares. But, at 18.40 times trailing sales, DoubleClick is far from being the most expensive stock on the Internet. See what we mean by mixed signals-- the stock appears fairly inexpensive, yet the underwriter is intimating that the shares have already nearly played themselves out. |
