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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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    • Available on USAI's website at www.usaicorp.com but repeated here for those who are interested.

      Upgrades Just Published
      =======================
      "1Q Driven by Strong Online Trends -- Raising PT on Higher FCF", Sound View Financial
      http://www.usaicorp.com/CC/Clips/2003/May/050203/Soundview.pdf

      "Q1 Confirms Strong Business Trends; Raising Estimates" - Pacific Crest
      http://www.usaicorp.com/CC/Clips/2003/May/050203/pc'usai'5'2'03.pdf

      "Strong 1Q; Raising Estimates; maintain overweight" - JP Morgan
      http://www.usaicorp.com/CC/Clips/2003/May/050203/jpm'05'2'03.pdf

      "USAI: Increasing Ebitda and FCF Estimates and Target Price" - Thomas Weisel
      http://www.usaicorp.com/CC/Clips/2003/May/050203/tw'usai'05'2'03.pdf

      "Strong 1Q; Expect Solid Cash Flow Growth Over '03" - CIBC
      http://www.usaicorp.com/CC/Clips/2003/May/050203/CIBC.pdf

      "Solid Quarter; Raising Price Target" - US Bancorp Piper Jaffray
      http://www.usaicorp.com/CC/Clips/2003/May/050203/26790.pdf

      "USAI - Operating and Strategic Focus Delivered" - Bear Stearns
      http://www.usaicorp.com/CC/Clips/2003/May/050203/FV_USAI_05012003.pdf

      "Another Quarter, Another Big Upside Suprise" - Credit Suisse First Boston
      http://www.usaicorp.com/CC/Clips/2003/May/050203/csfb'expe'05'2'03.doc

      Again, do your own research...

      Cheers

      • 1 Reply to jeff44293
      • Funny they all mispredicted the "upside surprise". That trip to 15 might just have been baked in by the chefs at Chez Investment House. Could they be interestedly veering in the other direction now, mis-estimating again, despite Diller's virtual warning not to expect the same pace repeatedly?

        btw, do those reports include the number of shares each holds, and when bought? Could one find similar rafts of upgrades and rosy projections from these same firms for the darlings of spring 2000?

        and what's your take on all the dilution issues being floated here?

        Just curious.

    • Boy, everybody is sure sugar coating this. Where were all these analysts 2 months ago when USAI still owned majortiy stakes of EXPE and ROOM. Since then, significant dilution of stock due to high premium for EXPE and ROOM, increased competition, decreased commisions, airlines cutting flights, travelweb.com, yada, yada. But now they claim USAI is God's gift to the travel industry and after all these negatives have come to life. DB basing eveything on a whopping X2 online travel increase by 2007 and mentions nothing about decreased commsissions or competetion but increasing market share by 24% in 2004. I believe DB's estimates are in line and monkeys will fly out my butt. Still, USAI close within 15% of there price target 3 days after they announced it. Think they will downgrade for evaluation, probalby not, they will just raise there target. Forget to carry this number or decimal point in wrong place.

    • hahahaha, I knew I was right. Your posting Deutsche bank. Take a look back in February, Deutsche bank was listed as being involved with pickup of some of those warrants that LM sold off. 4.1 million shares in warrants were mentioned to have been picked up by an institution involved with Deutsche bank.

      So, we have the pump.

      32 MILLION SHARE WARRANTS WERE LET GO BY LM BACK IN February.

      Someone paid $240 million for 28 million and someone else arranged 4.1 million = 32 million.

      This could be the dilution Diller is afraid of.

      Is Deutsche bank trying to run the price up so those warrants can be exercised and sold?

      We all know what the dilution will do to the eps. The question is why would any investment banker recomend this stock right now with the dilution about to hit? hahahahah, we know the answer to that one.

      • 1 Reply to grdnnome
      • were left after the sale in February.

        LM also has the right to buy additional shares to keep their percentage of ownership from being diluted. Diller mentioned this on the conference call and said he would start to buy this WEEK to help offset this but that doesn't cover the 32 million share warrants that LM just released in February.

    • a warrant is what the state will issue for the arrest of Diller when the sheeeeeeeeeeet hits the fan :-)))))))))))))))))

    • Good answer

    • All the assumptions that Liberty and USAI will be shuffling warrant positions and offsetting with massive buybacks over dilution may prove irrelevant if Diller and Malone end up doing a major transaction together.

      If the Vivendi ties are unwound in a way that makes Liberty whole and resolves the USAI tax issues and simultaneously Diller and Malone act on an opportunity that benefits both of their companies, we could see a pretty major rethinking of the valuation issues yet again.

      This isn't getting pulled out of thin air - a careful reading of their moves since Messier left V-U puts this right on the radar screen. It's really just a matter of determining who the V-U asset buyers will be and what Diller and Malone are trying to acquire.

      Consider Malone forcing the 100% buy or release clause on QVC. Malone with 100% of QVC and Diller with 100% of HSN sets the stage for some interesting conversations. Or think of anyone holding properties that could make Liberty more of a media powerhouse and USAI more of an online powerhouse.

      The only things definite are that they're friends, they both want to take the money tied up in V-U and invest it elsewhere and they both know how to build value into vision.

    • good points, all

    • interesting paragraph from previous post:

      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...

    • why do you send the wrong information? Both in the conference call and in the analyst reports, dilution is taking into account into the estimates given.

    • Wrong buddy.

      Diller only mentioned guidance for 2003 and that only factors in a portion of the dilution.

      He also talked about LM diluting the float and that he would buy to offset that when LM buys BUT HE DIDN'T MENTION THE 60 MILLION SHARE WARRANTS.

      He didn't mention the fact that 32 million shares in warrants may be exercisable as soon as this week.
      Check out the news for 2/12/03.

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