National Information Consortium (Nasdaq: EGOV) rose 5/8 to 10 3/8 Monday after Credit Suisse First Boston began coverage of the stock with a strong buy recommendation.
Analyst Christopher Vroom put a near-term price target of $35 on the stock, which he expects to reach $60 in 12 months.
“NIC boasts an attractive financial model, characterized by annual revenue growth rate in excess of 50 percent for the next several years, EBITDA profitability in 2001, attractive and rapidly expanding gross margins, and a three to five year EBITDA profit margin of 15 to 20 percent,” said Vroom. He predicts the company, which provides e-commerce services to federal, state and local governments, will see $93 million in revenue this year, with a loss before items of 5 cents a share.
The stock, added Vroom, trades at a discount to other B2B companies. “Given NIC’s unique leadership position in the e-government sector, accelerating growth and near-term profitability (on an EBITDA basis), we would expect NIC to trade today at levels similar to the B2B group’s median multiples,” he said.