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PIMCO Covered Bond Source UCITS Message Board

  • dickeypiper1 dickeypiper1 Mar 20, 2013 10:02 PM Flag

    Earnings & CC

    If they can continue to get renewals / new clients then 2013 could be a good year. 1 new client and 1 renewal had to be booked in 2013: Q1 so already setting up for a decent quarter. Will also have 4 quarters where 2012 comps should be faitly easy to beat. They really underestimated client decision process time but readily admitted is at least honest. When a client does sign it is a 5 yr. contract. Supposedly have many opportunities for new business......the dream would be to get a large client (game changer). If the product is as good as they say it is I wonder why another player doesn't try to acquire them...would seem to be a huge risk/reward.

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    • The CC was more-or-less what I imagined. Roblin only gave the low numbers of his estimates (saying his first guideance of $23 million was reduced to $19 million, instead of including the whole prediction: $23 - $27 million and then revised to $19 to $23 million. And - surprise! - it was the long sales cycles that were responsible! Well, even if he would have booked the two he talked about, he would barely have squeaked through on his $19 million estimate.

      And, yes, they sound optimistic - 3 to 4 more times as many "at bats," best product in the biz, etc. etc. But, when have they not sounded optimistic and promised great things to come, keeping in mind, mind you .... what is it ... oh, yes! ... the long sales cycles. So, the question is, how much time do we give them to produce? It's been a few years now that they've been promising great things. And their market share is still one-tenth of a percent, which it's been for a long time. I was also a little concerned that there was only question for the COVR team. Has everybody else simply stopped following them? And that one question was from Roger Benson, whose plug for COVR way back in 1997 in Business Week got me into this whole mess. Sorry to sound a bit snarly, but it's been 15 years and I have beaucoup de shares.

      • 2 Replies to space.elephant
      • Hello, Mr. Piper -

        The system wouldn't let me reply to you, so I'm replying to you through myself. I hope you're right in the "little downside good upside" comment. You noted "IF" the product is as good as they claim. And that might be a BIG if. They may genuinely believe it's the best (like my kid's artwork is clearly better than any other kid's in the world), but quality, sometimes like beauty, can be in the eye of the beholder (or creator). The stock hit its high mark in 1997 at $5, and that's in 1997 dollars. In May 2011 it hit $2.80, and in May 2012 it hit $2.40. Now it's $1.20. I understand that they've poured a lot of money into sales and acquisitions, but, now that they're a completely new company, and can truly "cover it all" (policy, claims, billing), we'd hope hope hope that this thing will move up.

      • Considering what the valuation is my take is that at this point in time there is very little downside risk and the possibility of a nice upside move. I think that they should be able to retain the majority of their existing clients and the positive is that they are adding some new ones. Also as John had mentioned on one of the presentations they are currently supporting both the legacy and the new system so once the legacy is dropped there will be some decent cost savings. Not saying it will happen but in the event that they were to sign a new large client the stock price could immediately double.

        Also I still wonder about the possibility of COVR being an acquisition target. IF the product is as good as they claim combined with the fact that they are adding some new customers then why wouldn't a bigger player simply acquire a 'pesky' little competitor that is selling at a low valuation especially when compared to Guidewire.

        Finally the 2012 earnings results were so dismal that when they report in 2013 the comps will be incredibly easy to beat which often results in a higher stock price.

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