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Technology Stocks : EarthWeb IPO -- Ignore unavailable to you. Want to Upgrade?

To: mod who wrote (115)	12/7/1998 12:52:00 PM
From: Platter	Read Replies (3) \| Respond to of 177

From Briefing.com.....EARTHWEB INC (EWBX) : Are investors bidding up EWBX shares this morning because they are "paying little heed to conventional valuation metrics" or because the co-manager of the company's IPO is attempting to justify its current valuation? It's a chicken or the egg argument. The provider of Internet-based online services to the information technology (IT) community has watched its stock vault 35% this morning after J.P. Morgan (lead-underwriter) and Volpe Brown Whelan (co-manager) initiated coverage with "buy" ratings. While Volpe Brown admits EWBX's stock appears expensive by any conventional measure, the firm says it is recommending EWBX shares for two reasons: (1) investors in Internet stocks are paying little heed to conventional valuation metrics in the current market environment; (2) EarthWeb possesses first mover advantage in a multi-billion dollar market online advertising to, and transacting with, IT professionals. Volpe's 12-month price target of $68 assumes no expansion in the stock's current multiple or market cap to forward 12-months revenues. But what it does assume is that at 136% above its IPO price (based on stock's closing price Friday), EWBX shares are fairly valued. (If that is the case, why wasn't the deal priced closer to $33 when it debuted less than a month ago)? Projections: Over the long-term, Volpe expects EWBX to expand revenues by 50% annually. For fiscal years 1998 and 1999, firm is forecasting a loss of $1.62 (on revenue of $3.1 million) and a loss of $1.45 (on revenue of $18 mln). Volpe does not expect profitability until late 2000. While EWBX could eventually hit Volpe's $68 price target (which would probably be due in large part to the firm helping feed the frenzy), Briefing.com continues to worry that the capitulation by major brokerage firms to a momentum-based analysis style is not good for the long-term health of the market.