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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: Scott Williams98 who wrote (7192)	3/17/1999 10:50:00 PM
From: RON BL	Read Replies (2) \| Respond to of 8307

from the strret.com must read Egghead.com Hatches Plan to Attract Wall Street SAN FRANCISCO -- Long neglected by analysts, Egghead.com (EGGS:Nasdaq) might be about to get some serious attention. "It's a company that always had some promise. It's got a good brand, dedicated customers, and it's tried to make do with a series of tough challenges," says Arcadia analyst John Taylor, who gives the stock a rating of market outperform and whose firm has no underwriting relationship with Egghead.com. Taylor says that Egghead.com has been overlooked because it "has not been real communicative with the Street." That's changing, thanks to Egghead.com's secondary offering last Friday. The company sold 5 million shares of its common stock at a price of $13.50 per share with the help of four underwriters: Hambrecht & Quist, BancBoston Robertson Stephens, Prudential Securities and US Bancorp Piper Jaffray. On Monday, H&Q analyst Genni Combes initiated coverage of the stock with a buy rating. Combes says the company is one of the top e-commerce sites and is "a leader in off-price computer product retailing," with more than 750,000 customers. She expects fiscal 1999 revenues of $143 million, $200 million in fiscal 2000 and $370 million in fiscal 2001. Egghead.com rose more than 4% Monday and another 4% on Tuesday, when it closed the day at 15 3/4. Initial buy ratings from underwriters, while hardly surprising, can generate strong interest among investors. When EarthWeb (EWBX:Nasdaq) drew buy ratings from its underwriters J.P. Morgan and Volpe Brown Whelan on Nov. 11, the stock climbed 58% in a day. When BancBoston Robertson Stephens initiated coverage on eBay (EBAY:Nasdaq) with a buy on Oct. 19, the stock jumped 26%. When the other underwriters -- Goldman Sachs, BT Alex. Brown and Donaldson Lufkin & Jenrette -- initiated coverage with high marks over the following week, eBay soared another 62%. Prodigy (PRGY:Nasdaq) rose 13% earlier this month when underwriters ING Baring Furman Selz and Bear Stearns picked up coverage March 8, both with buy ratings. The additional coverage is likely to keep pushing the stock higher, says Christopher Lord, a buy-side analyst for Amerindo Investment Advisors, which holds no position in Egghead.com. Investors who buy Internet stocks are always looking for a reason to buy into a stock, and the added attention "makes people more confident in the stock," he says. The reports may finally answer some questions that Egghead.com fans have been asking for a while: Why, for example, does Egghead.com have such high revenues and such a relatively low valuation? Egghead.com is trading at 2.59 times its trailing 12-month revenue of $180.96 million. Beyond.com is trading at 18.18 times its trailing revenue of $36.65 million. So, why the discrepancy? "I wonder that all the time," says Arcadia's Taylor. "It's an incredible irony."