BTAB comments from 1/25:
HIGHLIGHTS:
DOUBLECLICK CONTINUES TO DEMONSTRATE FLEXIBILITY IN ITS NETWORK STRATEGY
DoubleClick announced today that it will expand its services by opening its Network to highly branded Web sites on a 'non-exclusive' basis. We note that the Company's current Network is only comprised of 'premium' Web publisher clients that it represents in exclusive advertising sales relationships. Web publishers joining the expanded Network will now be able to place a portion of their advertising inventory with DoubleClick without becoming a 'premium' exclusive DoubleClick partner. As such DoubleClick should be able to scale
inventory across a larger publisher mix in such content specific categories as finance, entertainment, sports and travel, thus offering its advertisers a broader audience reach.
In an attempt to preserve the revenue streams of its current DoubleClick Network, the Company will launch DoubleClick Select in March, a Network that will focus entirely on its premium Web publishers it represents in an exclusive advertising sales relationship. We note that advertising buys across the non-exclusive Web publishers can only be purchased on a category basis, not
on a site-by-site basis, thus maintaining the ad placement advantages currently received by exclusive Web publishers in the DoubleClick Network.
Overall, we believe the Company's initiative to open its Network to
'non-exclusive' Web publishers should create incremental revenue
opportunities for the Company by aggregating the excess advertising inventory of a broad base of clients. We feel DoubleClick's willingness to continually adjust its business model by adding innovative advertising solutions has been a key driver in establishing its leading market position.
We are not changing our revenue or EPS estimates at this point as it is unclear when a material upside effect could be realized from these new initiatives.
VALUATION
We reiterate our 12-18 month price target of $140 on the shares of
DoubleClick, which represents a 14x multiple of our 2000 revenue forecast and a 233x 2000 TEMA P:E multiple (211% premium to our 75% LTGR). Importantly, other leading Internet franchises such as Yahoo!, AOL, Amazon.com and eBay are 'currently' trading at premiums to their 2000 TEMA P:E multiples of 263%, 89%, 218% and 386%, respectively. We continue to believe that DoubleClick should represent a core holding for investors seeking solid exposure to the interactive advertising industry. In our opinion DoubleClick could trade higher, especially
now that it has fully mitigated the AltaVista risk. We reiterate our
"strong buy" investment rating on the shares of DoubleClick. |
