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Technology Stocks : NHC COMMUNICATIONS (TSE:NHC) acquiring THE FIBER COMPANY -- Ignore unavailable to you. Want to Upgrade?

To: cleto who wrote (428)	8/24/2000 7:35:54 AM
From: TheSlowLane	Read Replies (1) \| Respond to of 856

Here is the report: Call the KBRO Trading Desk at 1-800-807-8723 Register for the KBRO DSL Investor Forum at DSLCon Boston – September 18 & 19, 2000 – at www.kbro.com NHC COMMUNICATIONS, INC. (NHC C$11.50) RATING: STRONG BUY PRICE TARGET: C$20 INITIATING COVERAGE OF NHC COMMUNICATIONS WITH A STRONG BUY NHC is an up and coming player in the DSL cross connect space. Revenue ramp and customer announcements have begun. We expect NHC to do well with larger DSL carriers such as ILECs and PTTs. Catalysts include revenue ramp, customer announcements and NASDAQ listing in next several quarters. Our C$20 price target suggests roughly 70% upside. We are initiating coverage of NHC Communications with a STRONG BUY rating and a 12-month price target of C$20 per share. NHC is a 15-year-old company with a background in data networking which is transforming itself into a key DSL equipment player with the recent introduction of a fully functional cross connect product known as VCCS, or virtual cross connect system, for use by DSL carriers. While NHC is only a fledgling player in this space, it has recently secured two major CLEC contracts with, we believe, NewSouth Communications and, most recently, UUNet Italia. We believe the company is on the verge of winning several other contracts. We have taken a rather conservative view in our modeling and our valuation, yet we still come up with a target price 70% above the current trading level of the shares. We see a number of upcoming catalysts in NHC over the coming quarters. However, we would note that NHC is by no means an undiscovered stock with the shares having risen from C$0.08 as recently as last December to as high as C$22.00 in March prior to the tech stock correction. As a result, we think the shares have now settled in and are likely to trade primarily on fundamentals. We have been watching NHC for some time now and they presented at our investor forum at DSLcon last spring in San Jose. What we are now beginning to see is a significant take-off in the company’s cross connect business from nothing in the October 1999 quarter to over 60% of revenue in the April quarter. This revenue ramp has largely been driven by the company’s first CLEC customer announcement earlier this year. The recent signing of UUNet Italia should boost revenue going forward. As well, in our discussions with management they noted that they believe they are well along toward securing one or more sizable contracts from major U.S. ILECs. Additionally, management has made no secret of the fact that it is targeting a U.S. NASDAQ listing in the next several quarters. As U.S. investors begin to understand NHC’s positioning and as the shares begin trading on a more accessible market for these investors, we look for a significant sustained rally in the shares.