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Technology Stocks : FDC : First Data Corp -- Ignore unavailable to you. Want to Upgrade?

To: greg-b who wrote (263)	7/19/2001 8:23:46 AM
From: JakeStraw	Read Replies (1) \| Respond to of 323

First Data (FDC) is leveraged for online growth by Dave Sterman, equity research columnist theinternetanalyst.com From credit cards to ATMs, billions of dollars now cross the digital networks daily. And First Data Corp. (FDC) has a hand in many of those transactions. Next up: the World Wide Web. First Data has developed a new division to develop a new suite of digital platforms that are designed to harness the power of the Internet. To be sure, First Data is an analyst favorite. Nine analysts rate its stock a "strong buy" while another dozen have a "buy" rating on the stock. After the company released second-quarter results that exceeded consensus estimates, analysts moved quickly to reiterate their bullish outlook. First Data earned 61 cents a share in the quarter, which "is all the more notable in the current tough macro environment," notes Goldman Sachs' Gregory Gould. In a July 17 research report available to institutional investors, Gould ran through the company's various operating divisions, noting strength at every turn. That helps explain why Goldman has the stock on its Recommended List. Although the analyst declines to establish a specific target price, he notes that price appreciation is possible and lists the factors. And it's quite a track record at that. As JP Morgan's Matthew Fassnacht points out in a July 16 note, First Data has topped earnings estimates for 10 straight quarters. Fassnacht, who rates the stock a "buy," sees the stock appreciating 10 percent from current levels to around $78. He arrives at that price target by averaging the results of four distinct valuation methodologies. Bear Stearns' Jim Kissane thinks the stock can rise even higher, to $85. In his July 12 institutional report, he deduces that FDC should trade for 30 times his 2002 EPS estimate of $2.90. Kissane is especially enamored of First Data's Western Union division, which contributes 50 percent of profits and is growing at an 18 percent clip. But other analysts are intrigued by the potential opportunities represented by the company's Internet strategy. First Data is pursuing a variety of online initiatives with partners such as IBM (IBM) and Verisign (VRSN). All of its emerging programs are bundled in its e-ONE division, which had $20.5 million in revenue in the recent quarter. "Emerging payments is still very small in relative size at just 1.2% of Company revenue," writes U.S. Bancorp Piper Jaffray's Bradley Berning. In an institutional research report July 12, however, the analyst adds "it has been an important strategic focus for First Data of identifying, commercializing, and operating innovative emerging payment businesses." The analyst, who rates FDC a "strong buy," sees shares rising to $78 as well, which would be 27.3 times his 2002 EPS estimate of $2.85. Dain Rauscher Wessels' Jon Arfstrom agrees that e-ONE could play a key role in the company's future. "The segment's revenue growth has the potential to accelerate in 2002, becoming an increasingly important part of the overall story." In his July 13 note, Arfstrom raised his EPS estimates for 2001 and 2002 and recommends purchase, as First data "is one of the highest quality ways to play the trend in electronic payments growth." The analyst's $80 price target is arrived at by placing a 23 times multiple on his 2002 EPS estimate of $2.85. Standard & Poor's weigh in with a review of the quarter as well. And as is always the case with S&P, the July 16 retail report is stocked with a rigorous financial ratio analysis. In addition, the report walks readers through a comparison of valuations in the sector, and provides a chronology of important events affecting the company over the last year. S&P also offers a rare dissenting opinion on the stock, arriving at a target price of $47 — which is roughly 30 percent below current levels. Though S&P acknowledges the current vibrancy in First Data's business, they nevertheless feel that "much of the good news is already reflected in the price."