WEBT... Research Report... STRONG BUY-AGGRESSIVE, PRICE TARGET $65...
(...We recently learned that WebTrends has been selected as the management/analysis solution for one of the biggest e-commerce sites on the Internet...)
From Dain Rauscher Wessels, May 21, 1999 Report...
"June-Quarter Business Momentum Remains Strong: WEBT shares have come under renewed pressure over the past several days amid a turbulent market for Internet stocks. We believe the recent stock price action is wholly divergent from underlying business trends and near-term execution at the company, and view the share price as an attractive buying opportunity given the company's strong business momentum and expected near-term news flow. We remain very comfortable with WebTrends' ability to met or likely exceed our recently raised June-quarter estimates of $3.4 million in revenues and EPS of $0.03.
Load-Balancing Partnership Developments: WebTrends recently announced strategic partnerships with two major vendors of load balancing technology for server clusters: Radware and F5 Networks. We believe these partnerships are important because they will enhance WebTrends' technical capabilities, and competitive advantage, in high-end enterprise installations. Additionally, they provide WebTrends with incremental distribution: both Radware and F5 plan to offer free, 14-day trial versions of the Enterprise Reporting Server with theri products, and to conduct other joint marketing activities. (Exodus Communications, a large F5 customer, does not fall under the umbrella of the partnership.) Cisco, the third prominent player in load balancing, has not (yet) announced any partnerships with companies in the server analysis/management arena.
Distribution Efforts Ahead Of Plan: WebTrends is aggressively ramping up direct and indirect distribution in order to increase sales of higher-priced enterprise products and expand its global reach. We believe the company's hiring efforts are running ahead of plan (which calls for 10 new direct sales and telesales personnel by the middle of the September quarter), and that the pipeline of future hires remains strong. Sales productivity and average transaction sizes are continuing to trend upward as a result of the following: 1) new product offerings, including Enterprise Reporting Server for Unix and Security Analyzer, that have enhanced the functionality of the company's enterprise offering; and 2) better visibility and credibility with corporate customers thanks to the company's initial public offering and recent high-profile customer wins. The WebTrends portal site is continuing to run ahead of plan, (as measured by both traffic and interest from advertisers), with the formal public launch is scheduled for mid-June.
Several Positive Announcements Coming: We expect several positive announcements over the next several weeks as WebTrends gears up for the release of CommerceTrends and its portal site. We believe the company is likely to announce new distribution agreements and strategic partnerships by quarter end. Finally, we recently learned that WebTrends has been selected as the management/analysis solution for one of the biggest e-commerce sites on the Internet. We expect the deal is likely to close in the near future and look for other high-profile customer win announcements going forward.
Stock Opinion: We reiterate our Strong Buy-Aggressive rating on WEBT shares. Our estimates and 12-month price target of $65, which is based on a discounted cash flow analysis of projected year 2003 earnings and a discount rate of 20% that is consistent with comparable companies, are unchanged."
Internet Infrastructure:
Stephen H. Sigmond
ssigmond@dainrauscher.com
(612) 313-1223
Cameron P. Steele
csteele@eainrauscher.com
(612) 1224
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