THE REPORT:
Actrade Picks Up New Coverage; Buy (9/29)
On September 25, Stuart Barich, an analyst with Auerbach, Pollak & Richardson initiated coverage on Actrade International (NASDAQ: ACRT) with a "strong buy" rating.
Barich likes Actrade due to its strong financial performance, quality management, solid balance sheet, and attractive valuations. He expects Actrade to earn $0.70 per share in FY 1999, and $1.02 per share in FY 2000. According to Barich, revenue is expected to grow by about 85%, to $182.4 million in fiscal 1999, and about 80%, to $326.5 million in fiscal 2000. The growth will be driven by both domestic TADs and international TADs.
In Actrade's fiscal 1998, ended June, revenue grew 125%, to almost $100 million. Earnings rose by more than 85%, to $0.52 per share. Due to continued growth of its TAD program, Actrade is concentrating on increasing the percentage of revenue derived from this program. For the last three to four years, TAD grew on average by more than 200%, and this year TAD increased 156%, to $55.5 million, representing 56.4% of total 1998 revenue. Net income from TAD rose 592%, to $637,000.
During the fourth quarter, Actrade established a new wholly-owned subsidiary to focus on international TADs. The company also plans to open offices in Toronto and London. The international expansion is expected to make a major contribution to Actrade's growth.
Price Target
Barich's conservative price target is $25, which is about 35 times his estimated 1999 earnings estimate of $0.70 per share and about 24 times his 2000 earnings estimate of $1.02 per share. |
