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IAC/InterActiveCorp Message Board

  • jeff44293 jeff44293 May 4, 2003 1:21 AM Flag

    Many upgrades on Thurs, Fri...

    Here is just one.

    [The following is an excerpt from Deutsche-Bank's 1Q writeup on USAI. Posted here for your information, but don't trust the analysts at their word... Do your own research.]

    Owning 24% of the Biggest Vertical on the Internet Today in Travel Services

    Simply put, we are impressed with management's execution and ability to scale the business through such difficult times. Indeed, even though HSN revenues came in slightly lighter than expected, HSN gross margins improved, which helped to offset the top-line weakness. In our view, USA Interactive now represents one of the only investment opportunities to participate in the ongoing shift in travel purchases from off-line to online over the next five years. We estimate that the company, collectively with its travel properties, enjoys 24% share of the online travel market.

    Moreover, the online travel market is forecast to grow from $22.7 billion in 2002 to
    almost $50 billion in 2007, representing a 17% CAGR. These industry estimates could prove conservative, especially given the positive impact on growth from any economic recovery. As such, we believe that our
    Hotels.com and Expedia revenues of $2.23 billion this year and $2.77 billion
    in 2004 could prove conservative once again, driven by: ongoing market share gains (24% growth in '04 essentially in line with industry growth) and continued migration to online (from off-line).

    We are once again raising our 2003 revenue and cash net income per share forecast from $6.0 billion and $0.75 to $6.1 billion and $0.79. Our EBITA forecast has been raised from $750 million to $856 million, representing a 14% increase. USA Interactive now believes that the potential for $1 billion
    in free cash flow exists for this year. We are also establishing a 2004 cash
    net income per share estimate of $0.98 on revenues of $6.93 billion (up 13%
    Y/Y) and EBITA of $1.07 billion.

    We are boosting our 12-month price target on shares of USA Interactive from $29 to $40, and still believe this target could prove conservative. Our $40 price target implies 25x 2003E free cash flow of $1.0 billion (on an enterprise basis), 51x 2003E EPS and 41x 2004E EPS, and 30x 2003E EBITA of $856 million. We reiterate our BUY investment rating on shares of USA Interactive, and continue to recommend investors add to positions at current levels...

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