Ok, comic relief time..
Robbie Stephens: Time to Buy Internet Stocks TODAY
iionline.com
Dave Sterman: Director of Online Research (5/27/99)
Investors are anxiously trying to figure out if it's time to move back into the Internet
sector. With tech stocks historically weak in the summer, many fear the carnage could
continue. Most seem to have adopted a wait-and-see attitude from the sidelines. But not
all people recommend that.
In his weekly missive to clients, BancBoston Robertson Stephens' Keith Benjamin said
get back in the game
'We are at an important inflection point in the Internet stock group,' he writes, adding
that 'most stocks have already fallen as much as we've seen in previous quarterly
patterns. In our view, many investors appear to have given up after recent declines,
demonstrating capitulation that typically defines the bottom.'
Of course, he acknowledges that the stocks could fall yet further, yet he thinks that most
of the damage has been done. 'While it is almost impossible to pinpoint the exact day of
defeat, we believe we are close enough to start to be more aggressive.'
But Benjamin is quick to add that some Net stocks will continue to languish, and that the
sector has matured enough to call for better stock selection. 'Despite current apparent
lack of discrimination, we remain convinced that stock prices will tend to mirror
underlying fundamentals over time, with the winners eventually growing into significantly
higher valuations.'
But the flood of Net IPOs may have watered down the field, making the task of
choosing eventual winners and losers more onerous. 'With so many recent IPOs, we
believe it takes time for investors to appreciate new stocks,' Benjamin writes. He still
thinks investors should stick with the proven leaders but should also include a smattering
of smaller and newer upstarts.
Benjamin's Picks
Among the more well-known names, his favorites include Amazon.com (NASDAQ:
AMZN - Quotes, News, Boards), America Online (NYSE: AOL - Quotes, News,
Boards), CNET (NASDAQ: CNET - Quotes, News, Boards), CMGI (NASDAQ:
CMGI - Quotes, News, Boards), eBay (NASDAQ: EBAY - Quotes, News, Boards),
Lycos (NASDAQ: LCOS - Quotes, News, Boards), TicketMaster Online-CitySearch
(NASDAQ: TMCS - Quotes, News, Boards) and Yahoo! (NASDAQ: YHOO -
Quotes, News, Boards).
Moving down the food chain, Benjamin recommends InfoSpace (NASDAQ: INSP -
Quotes, News, Boards) and Digital River (NASDAQ: DRIV - Quotes, News,
Boards). He also throws out a few more ideas for investors:
'Gemstar (NASDAQ: GMST - Quotes, News, Boards) …is one of our strongest
recommendations. This week, AOL signed a licensing pact to use Gemstar's Electronic
Programming Guide (EPG) in its AOL TV, which AOL plans to launch in 2000. We
estimate AOL will pay Gemstar roughly $5 per member per year as a royalty for each
AOL TV member. In addition, AOL will share revenue from advertising and commerce
at an undisclosed rate. We believe that Gemstar's EPG can also become a
television-based portal to the Web. We believe AOL's decision, after the company
spent significant time researching its programming guide options, essentially validating
Gemstar's patent position. We continue to believe that the story is under-appreciated.'
'Ticketmaster Online-CitySearch is down over 30% from its mid-April high. We view
TMCS as a stand-out franchise, with a ticketing business that continues to blow away
estimates, the Internet's leading local city guide network. At its current market value of
just under $2 billion, TMCS is valued at just under $600 per each of its 3.3 million
unique users. This is compared with newspaper companies Gannett (NYSE: GCI -
Quotes, News, Boards), Knight Ridder (NYSE: KRI - Quotes, News, Boards), Times
Mirror (NYSE: TMC - Quotes, News, Boards), Dow Jones (NYSE: DJ - Quotes,
News, Boards), and New York Times (NYSE: NYT - Quotes, News, Boards), which
are valued at an average of over $2,000 per reader, and does not include the ticketing
business. We believe we will continue to have the chance to raise estimates for TMCS.'
'SportsLine (NASDAQ: SPLN - Quotes, News, Boards - QUOTES, NEWS,
BOARDS'>Quotes, QUOTES, NEWS, BOARDS'>News, QUOTES, NEWS,
BOARDS'>Boards) is down 36.3% from its April high. We believe SportsLine's
continuing strategic and marketing efforts will eventually be rewarded by a leading and
profitable position in this space. This week, in a multi-year exclusive agreement,
SportsLine was selected to produce and host the official Web sites of Major League
Baseball. SportsLine will be responsible for all advertising and sponsorship sales, with a
50/50 revenue share after SportsLine reaches minimum guarantees and net of certain
expenses, making the effective split better MLB online store.' |
