Undervalued Internet IPO
MMPT...Modem Media.Poppe Tyson
Valuation and Model Discussion
- Attractive Valuation. We believe Modem Media.Poppe Tyson's shares are currently trading at a discount to the company's closest comparables which provides a good opportunity for share appreciation. MMPT is currently trading at 6.1x and 4.7x calendar 1999 and 2000 revenue estimates of $53.3 million and $70.0 million versus the comparable universe of 10.3x and 5.8x.
DCLK trades at 3.5x premium to MMPT
MMPT (Market Capitalization)...$364.2M Sales(ttm)....$42.5M
DCLK (Market Capitalization)...$2.63B Sales(ttm).....$80.2M
Key Selling Points
- Leadership Position. Modem Media is a leading, full service provider of digital interactive marketing solutions for Fortune 500 companies, and emerging companies with online business models. The company has approximately 34 domestic clients and 20 international clients, including blue-chip clients in the financial services, communications, retail and electronics industries. Customers include AT&T, Citibank, Compaq, JC Penney, John Hancock and Sony. The company has won numerous industry awards and currently has four offices in the U.S., three offices internationally (Toronto, Hong Kong, London), and an affiliate in Sao Paulo Brazil.
- Leader in rapidly growing Internet E-commerce Services market. The company provides "mission critical" creative/systems integration services to Fortune 500 companies seeking to establish large-scale web-based points of presence to exploit the full range of web-based applications from branding to direct selling and after-sale customer service and support. IDC estimates the Internet and E-commerce services market to grow from $4.7 billion in 1998 to $22.1 billion by 2002 - a 48% compound annual growth rate (CAGR).
- Strong Financial Performance. Modem Media is expected to maintain its solid revenue growth clip. Revenues in 1998 were $42.5 million, a 44.6% increase over full year 1997 revenues. In addition, 4Q98 annual run rate increased 11% over September's run rate. Revenues in 1999 are expected to increase 25% to approximately $53.3 million. Modem Media's growth is organic; no acquisitions are included in the company's projections. We expect the company will turn profitable on a net basis in late 2000, with EBITA break-even estimated for 3Q99. Importantly MMPT has shown the ability to migrate multi-national organizations through MMPT's global presence. The company is increasing its share of the customers worldwide spending, as evidenced by the rapid profitability increase in the London operation (from $50k revenue per employee in 4Q97 to $98k per employee in 4Q98 on an annualized basis).
Number of brokers
recommending as:
Strong Buy.........1
Moderate Buy....2
Hold...................0
Moderate Sell.....0
Strong Sell..........0
modemmedia.com
MMPT is a holding of the Munder NetNet fund netnet.munder.com |
