Great News!!! Analyst's yet another STRONG BUY recommendation, siting
ELBO's Internet business' strong momentum!!!! Enjoy!!!
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08:19am EST 14-Dec-98 Prudential Securities (H.G. KATICA 404-842-9202) ELBO
ELBO: INTERNET SALES GENERATING IMPRESSIVE MOMENTUM; RE-ITERATING STRONG BUY
ELBO: INTERNET SALES GENERATING IMPRESSIVE MOMENTUM; RE-ITERATING STRONG BUY
R E S E A R C H N O T E S December 14, 1998
Subject: Electronics Boutique Holdings Corp
(ELBO-15 5/8)--OTC
Retail OPINION
COM EPS =========
Current: Strong Buy
Prior:
Analyst: Harry G. Katica (404) 842-9202 RISK: High
12-Month Target Price: $22
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Ind. Div.: --- Yield: --- Shares: 20.2 mil. 52-Wk.Range: 26-7
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EPS FY Year P/E 1Q 2Q 3Q 4Q
Actual 01/98 $ 0.74 $ 0.08 $(0.09) $ 0.02 $ 0.86*
Proforma# $ 0.62 $ 0.07 $(0.06) $ 0.03 $ 0.58
Current 01/99 $ 1.03E 15.2X $ 0.11A $(0.02)A $ 0.08A $ 0.77E
Proforma# $ 0.91E $ 0.09E $(0.02)
Current 01/00 $ 1.17E 13.3X
* Includes non-recurring income of $0.08 per share after-tax.
# Assuming the offering, reorganization, and S-Corp Dividends were
completed at the beginning of 1997.
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Over the last six months, Internet sales at Electronics Boutique have grown from
an interesting complement of the retail store base to potentially a major
source of future growth. This transformation has been supported by consumer's
growing comfort level with E-Commerce and Electronics Boutique's continued
efforts to improve its Web site, called www.ebworld.com.
The added dimension of Internet sales creates a unique opportunity for those
investors looking to participate in E-Commerce without the risks associated with
an unprofitable start-up company. The Internet business is profitable for
Electronics Boutique and should remain a contributor to future earnings gains.
In a recent meeting with management, we learned the following important points:
_ Internet Sales In December Are Tracking Ahead Of Last Month's Pace.
Electronics Boutique generated record Internet sales of almost $800,000 last
month, helped by a redesigned Web site and the arrival of Zelda, a hit Nintendo
title. The momentum has continued into early December with other titles
continuing to sell well. On average, Electronics Boutique is processing 800-900
orders per day covering an average of 500-600 items.
_ The Company Is Gearing Up For Substantial Growth In 1999. While we had
initially believed $5-$7 million in sales was a reasonable target for the Web
site in 1999, recent trends suggest a much more rapid ramp-up. In response,
management has added a Director of Internet Commerce and is creating a strong
infrastructure to improve its overall Web business. In turn, we now believe
Internet sales could total $15-$20 million next year, compared to an estimated
$4 million in 1998.
_ The Internet Will Produce Growing Profits, Not Losses In 1999. While many
E-Commerce companies are concentrating on generating greater sales and
attracting more eyeballs, as opposed to making money, Internet related business
has been profitable for Electronics Boutique almost since inception, based
largely on the company's ability to attract advertising revenue from video game
vendors. We believe the business could earn at least $1 million in 1999, after
significantly increasing operating expenses, representing about $0.05 in
earnings per share. |
