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Monday April 27, 7:37 pm Eastern Time
Company Press Release
SOURCE: Stock Investor Trading News
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.
Subscribers to Stock Investor Trading News received this research on a first call basis.
SOURCE: Stock Investor Trading News |
