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Online Checking Firm's Stock Riding Internet Wave
Atlanta Journal and Constitution, Georgia: Apr. 8--Shares of CheckFree got a boost Wednesday from the Internet stock explosion, hitting a 52-week high and closing at $54.06 1/4, up $7.
The electronic and Web-based bill-payment processor's stock is up about 26 percent the last five days, 131 percent for 1999. Since a 52-week low of $5.75 in early October, CheckFree shares are up 840 percent.
Terrie O'Hanlon, CheckFree's senior vice president of corporate and investor relations, attributed the share surge to: more attention on Web-based bill paying and receiving; increased analyst coverage; the relative affordability of CheckFree's stock; and the fact CheckFree is starting to be viewed as an Internet-related stock.
"I think CheckFree is starting to be seen as a back-door Internet play, and these stocks are starting to complement the front door Internet stocks like Amazon.com and Yahoo!," she said. "There are three Internet plays: hardware and technology infrastructure companies like Cisco Systems; front-end companies like Yahoo! and Excite and Amazon.com; and the companies that will help them get content to keep customers coming back. CheckFree is one of those. "
She said the increase in online shopping and online stock trading is making people more comfortable with the idea of getting and paying their bills online.
Pacific Crest Securities Deutsche Bank Research started covering CheckFree last month. Pacific Crest analyst Rob D. Owens rated CheckFree a "strong buy. "
He expects its shares to be selling for $61 within 12 months.
Deutsche Bank analyst James Marks rates it a "buy" and expects shares to be selling for $70 within a year.
Steve Franco, an analyst with U.S. Bancorp Piper Jaffray, thinks CheckFree shares are up for two reasons, the first being a Wall Street Journal article about Yahoo!, a media company that has the Web's busiest site.
The article said Yahoo! is interested in buying companies or forming alliances.
CheckFree announced in January it signed a distribution deal with an Internet portal. Avivah Litan, a Gartner Group analyst, said CheckFree's deal is with Yahoo! But CheckFree has not commented.
Franco thinks investors may have misread the article and mistakenly thought CheckFree would be bought by Yahoo!.
The second cause may be an announcement last weekend that Wells Fargo bank has enrolled 150,000 customers in its online banking services, Franco said.
CheckFree has an agreement with Wells Fargo. Even though there's no guarantee all the new enrollees would pay their bills via CheckFree, it makes it that much more likely that CheckFree will add customers, Franco said.
"In the near term, it's not too exciting," Franco said. "But Wells Fargo has a long-term track record of converting these customers over to online bill paying."
Franco rates CheckFree a "strong buy" with a six-month target price of $53.
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(c) 1999, The Atlanta Journal and Constitution. Distributed by Knight Ridder/Tribune Business News.
[Copyright 1999, Knight Ridder Tribune]
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