from briefing.com:
SUPERIOR CONSULTANT HOLDINGS CORP. (SUPC) 30 7/8 +1 3/8 When you can't get in on an IPO, sometimes the next best
thing is to get in on a company that already owns stock in the company. That's the case with SUPC, which will own about 15% of DrKoop.com
(KOOP), the health advisory internet service whose chairman is the esteemed Dr. C. Everett Koop, former Surgeon General of the United States.
Dr. Koop gained a lot of public attention as the first government official to strongly speak out against the ill effects of tobacco. His unique look and
squeaky clean solid image will give DrKoop.com an instant brand identity. And since the biggest problem with information obtained over the
internet is trust, having Dr. Koop as the lead image is a real plus. It's the type of internet deal that venture capitalists would drool over, as the IPO
market will likely give this one a very high multiple. In fact, it is just about ridiculous. DrKoop.com had only $404,000 in revenue in Q1 of 1999.
The current expected IPO pricing of $9 a share gives the company a market capitalization of $247 million dollars, for a Price/Sales ratio of about
150. Pretty steep. We haven't concluded the complete study of DrKoop.com's business prospects yet, but one of the first things that became
apparent is a play on DrKoop.com through SUPC shares. Superior Consultant Holdings invested $6 million in DrKoop.com and will own 3.9
million shares, or 15%. At an offering price of $9 that makes SUPC's holdings worth about $35 - $40 million. If the IPO doubles, then SUPC's
share will be about $80 million. Not bad for a company whose usual quarterly earnings are about $3 million on $40 million revenue. In other
words, SUPC will likely reap about 6 years worth of earnings in capital gains the moment that DrKoop.com goes public. Since SUPC's current
market cap is about $320 million, the stock gain represents about a 25% instant increase. Superior's ongoing business looks pretty good, at first
glance, with steadily increasing earnings and revenues, currently at $130 million annually. Although the stock is up today, volume is currently
under the daily average of 157,000 shares, indicating to us that this play hasn't been widely picked up yet. SUPC float is 4.7 million shares,
outstanding shares are 10.36 million. DrKoop.com is expected to IPO in June. |
