Stock Investor Trading News Issues Strong Buy Rating on IFLY
AUSTIN, Texas, April 27 /PRNewswire/ -- Stock Investor Trading News
(http://www.sitn.com) has initiated coverage of 800
Travel Systems (Nasdaq: IFLY - news) with a ''Strong Buy'' rating for aggressive risk
accounts.
''We believe that 800 Travel Systems offers aggressive investors an excellent
opportunity to participate in the fast-growing
online travel service industry,'' says Louis Riley, Fundamental Analyst with Stock
Investor Trading News. ''The Travel
Industry Association of America (TIA) expects Internet ticket bookings to grow from
current levels of only 1% of all tickets
sold to 5% by the year 2000. The TIA estimates that the Internet's current 1% market
share represents $827 million tickets
sold. Consumers have quickly embraced the Internet sales model, with over six million
travelers booking trips online in 1997.
The TIA expects that number to more than double to over 12 million in 1998.''
''Internet industry expert Jupiter Communications Digital Commerce Group forecasts
that online travel revenues will grow to
$11.7 billion by the year 2002, ''locking in travel's position as the number one online
consumer spending segment.'' If such
growth is realized it would represent a more than 1300% gain over current sales levels
in only four years,'' notes Mr. Riley.
''We believe that 800 Travel Systems will soon be well positioned to capture a
significant portion of this large and fast growing
market. The company announced on April 9 that it will develop a new interactive
Internet travel reservation system that will
complement its current telemarketing sales model and upgrade its current website at
lowairfare.com. The company
plans to have the new system online by the end of the year.''
''The key word here is ''interactive'' -- the company plans to enable a customer to deal
directly with a reservation agent on
the Internet via real time chat. This innovation will distinguish 800 Travel Systems from
its Internet competitors in a most
meaningful way, as industry studies have found that access to a high level of customer
support is crucial to closing a travel sale.
We are unaware of any other competitor that plans to offer such value-added human
interaction, and we believe that the
company's planned technological edge will make its web site a leading contender in the
burgeoning Internet market. We
believe that the assistance of trained reservation agents will enable customers to secure
lower airfares than those currently
offered via competitors' sites, which frequently rely on off-the- shelf rates and which
are unable to weigh the various options
that may locate the actual lowest airfare for the consumer. ''
''800 Travel Systems has already demonstrated that it can execute a business plan. The
company grew revenues in the 1997
fiscal year by 164% over 1996, slashed its operating loss by 92%, and generated
positive cash flow. The company completed an
initial public offering in January 1998 that raised net proceeds of approximately
$2,993,000. More than half of those monies
have been earmarked for expanding marketing and recruiting and training an additional
200 reservation agents, more than
doubling the company's present level of staff. On April 16 the company appointed
director Mr. George Warde, former Vice
Chairman, CEO, and President of Continental Airlines and former CEO and President
of American Airlines, to the position
of Chairman of the Board.''
''We believe that in the near future the company's common stock will close with a bid
above $10 for seven trading days during
a 10 consecutive trading day period, enabling the company to call its outstanding
warrants for redemption and bring in an
additional $16.875 million to the company. These proceeds should ensure the
company's ability to achieve the growth strategy
set forth in the initial public offering prospectus: staff its Tampa and San Diego
reservation centers to full capacity of 520
reservation agents per staggered shift, expand marketing, and make opportunistic
strategic acquisitions.''
''We emphasize that an investment in 800 Travel Systems is only suitable for aggressive
investors. The company faces many
challenges, including formidable well-capitalized competitors with exclusive Internet
distribution agreements, negative
industry commission trends, and significant financial and execution risks. Moreover, the
company's shares have a small float
that represents less than 17% of all of the currently outstanding shares, which may
make for extremely volatile price
movements.''
''However, if the company can meet the business and financial challenges it faces going
forward as it has done in the past, we
expect the company's stock to eventually trade at valuation multiples that are in line
with other Internet commerce companies.
Preview Travel (Nasdaq: PTVL - news), another publicly traded online travel service
company, traded at a market
capitalization of over $432 million at approximately 32 times then reported trailing
twelve months (TTM) sales and at its
all-time high on April 3. A similar price to TTM sales multiple for 800 Travel Systems
would yield a market capitalization of
more than $263 million and a stock price over $25, assuming dilution from a warrant
call'' says Mr. Riley.
David Barney, Technical Analyst for Stock Investor Trading News, notes that ''now
that the Internet mania has settled down a
little and investors have had a chance to take another look at these stocks, we feel that
the solid Internet plays like 800 Travel
Systems will take the lead. Many of these stocks got temporarily extended and that is
why we have seen this extreme volatility.
However, the companies that have solid prospects like 800 Travel Systems have held
up better than most, because investors can
clearly see where these companies are going. Now that traders and investors have
culled most of the weak stocks from the herd,
we believe companies like 800 Travel Systems will strongly outperform the market
going forward.''
''800 Travel Systems has pulled back on very light volume after a tremendous run, and
now that the online travel sector has
been spotlighted at the Hambrecht & Quist Technology Conference in San Francisco
this afternoon, we feel that the investors
will give the stock another look. Online travel services company Preview Travel's
presentation at the conference after
Monday's market close should clearly separate this sector from the weaker Internet
stocks,'' says Mr. Barney.
''Anytime you purchase shares in an emerging sector you are taking a chance, and you
really need to do your homework before
investing. However, it is easy to see why investors are so attracted to these stocks.
Everyone wants to be part of the next big
wave, and the Internet may just be it. It will be years before we really know just what
the future holds for the Internet and for
many of these companies that are trying to cross the cyber-bridge. But staying with
companies that have a clear business plan
and a good management team is the best way to invest in the group, and if they have
are leveraging off an existing strong
business that has not previously been Internet based, that is just another plus,'' notes
Mr. Barney. ''We believe 800 Travel
System's ultimate success will be determined by the fact that it is a travel company now
marketing over the Internet, rather an
Internet company now trying to market travel.''
Stock Investor Trading News ( sitn.com ) provides a daily newsletter
service to traders and investors around the
globe. Some of the companies past recommendations have included Amazon.com, Inc.
(Nasdaq: AMZN - news), America
Online Inc. (NYSE: AOL - news), Applied Materials (Nasdaq: AMAT - news), Dell
Computer Corp. (Nasdaq: DELL - news),
Intel Corp. (Nasdaq: INTC - news), K-tel International (Nasdaq: KTEL - news), and
Tellabs, Inc. (Nasdaq: TLAB - news).
The company is in the process of building a new website which will be an online hub
for both traders and investors to exchange
ideas and get information.
Mr. Barney and Mr. Riley, as well as other principals and affiliates of Stock Investor
Trading News, currently hold a long
position in 800 Travel Systems via its common stock and/or warrants. |
