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DoubleClick Analyst Report
DoubleClick, Inc.
Nasdaq: DCLK Address:
41 Madison Ave., 32nd Floor
New York, NY 10010
Phone: (212) 683-0001
Fax: (212) 889-0062 Research Report
DoubleClick provides comprehensive advertising solutions for Internet advertisers and Web publishers. Fourth quarter revenues increased 40% to $22.4 million from the 3rd quarter of 1998. Yearly growth was 162%. The main source of future growth is expected to be DoubleClick Select, a non-exclusive advertising relationship with strong Internet brands. Presently DoubleClick provides advertising for over 100 top websites in exclusive and non-exclusive contracts. As Internet firms grow in size their appeal as a source of advertising increases faster than their growth in page hits. As such, DCLK is expected to outperform Internet content firms in general.
DCLK appears to be the Cisco Systems of Internet content. CSCO has increased over 25,000% during the 1990s as it became the leader in it's field without a high pubic profile. While Yahoo!, Ebay, Lycos, Excite, Amazon.com and @Home are all high profile and high visibility, they also trade at multiples far in excess of most equities and even most internet equities. This doesn't have as much to do with their earnings potential as the presence of mind they occupy. Though I'm not suggesting DCLK will also rise over 25,000%, it is similar to Cisco Systems in that strong growth is projected for years to come while it keeps a much lower profile relative to the others in the internet content sector. Earnings are expected in the 1st quarter of the year 2000 while revenue growth rate is expected to match that of YHOO and exceed that of LCOS, XCIT, and others. The strength of DCLK in terms of growth without excessive losses make it an excellent long-term value investment. Target price on DCLK is $235 by year end 1999.
Name Symbol Market Cap.
(billions) Revenues 1998
(millions) Revenues 4Q 1998
(millions) Price/ Sales
1998 Price/ Sales 4Q 1998 Yearly Growth 97 – 98 Quarterly Growth 3Q – 4Q Proj.
Growth
1999 Proj. Growth
2000 Price/ Sales 2000 Forecast
Profitability
Amazon.com AMZN 19.4 610.0 252.9 31.8 19.2 313% 64.5% 195% 145% 4.4 2001?
Broadcast.com BCST 3.1 22.4 7.6 137.5 101 145% 34% 150% 150% 22.0 2001?
eBay, Inc. EBAY 11.8 47.4 19.5 248.9 151 724% 51.1% 400% 300% 12.4 1998
Excite XCIT 6.0 154.1 54.1 38.9 27.7 163% 23% 110% 95% 9.5 4Q 1998
DoubleClick DCLK 1.8 80.2 29.1 22.4 15.5 162% 40% 155% 130% 3.8 1Q 2000
Go2Net GNET 0.64 7.68 3.18 85.0 51.3 >1000% 62.7% 325% 225% 6.2 1Q 1999
Lycos LCOS 5.3 71.6 24.8 73.9 53.3 152% 30.5% 125% 105% 16.0 4Q 1999
Yahoo! YHOO 36.3 201.4 76.4 178.8 118.8 189% 42.5% 160% 125% 30.8 1998
Relative Earnings Potential in the year 2000,
Return on Current Equity Forecast share
price appreciation
Profitable 1. DCLK
1. EBAY 2. GNET
2. YHOO 3. XCIT
3. XCIT 4. AMZN
4. GNET 5. LCOS
5. DCLK 6. EBAY
6. LCOS 7. BCST
Not Profitable 8. YHOO
7. BCST
8. AMZN
Forecast share price appreciation is based on present market capitalizations, expect revenue growth and expected earnings increases.
Summary of the Internet content sector: 90% share price appreciation by December 31, 2000 is very likely. Even that gain would allow for a dramatic reduction in outsized valuations presently seen, accounting for the expected increases in sales and profitability. Should the interest rate climate remain favorable and the world's macroeconomic troubles leave the USA relatively unaffected, a 125% gain seems possible. Internet content firms moving from losses to profits are expected to perform most strongly. Top Pick is DoubleClick, DCLK on the Nasdaq.
Share price when outlook on DCLK was issued (10:03 AM EST, January 29, 1999): 95 1/4
Price target on DCLK, 12/31/99: $235
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