Thinking Big Pays Off for AppNet
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Its IPO got a cool initial reception from investors last June, but lately Wall Street has been treating e-commerce services and software player AppNet like an emerging winner in its space.
Especially Thursday, when shares of AppNet (APNT) soared 36 percent in the wake of a strong Q4 report showing narrowing losses and healthy revenues. The stock hit an all-time high of 71 5/8 before closing at 70.
And while APNT may have cooled off somewhat Friday - it was trading in early afternoon at 65 15/16, down nearly 6 percent -- shares are still up more than 50 percent so far this year.
It was a different story last June 18, when AppNet's offer of 6 million shares at $12 each was greeted with yawns by investors. The stock opened that day at $12, and closed at $12.
Last quarter alone, AppNet won five contracts of $5 million or more, the most noteworthy coming from NASA and Sprint.
AppNet bills itself as an "end-to-end" provider of e-commerce services and software. Like many of its competitors, such as Viant (VIAN), USWeb/CKS (USWB) and Scient (SCNT), AppNet offers a broad array of consulting, design and marketing services.
For NASA, the company is developing Internet-based software designed to allow scientists to correct malfunctions in orbiting spacecraft. Its contract with UCCnet calls for AppNet to build and host a large platform for executing B2B transactions. Sprint has asked the company to develop interactive marketing programs for acquiring new long-distance customers.
Being a jack-of-all-trades makes it hard to stand out from the crowd, but AppNet appears to be pulling it off. Of course, the big advantage to offering so many services is that when you land a large contract from a NASA, say, the odds are that the customer will want to continue and expand the relationship.
With 1999 revenue of $112.3 million and a market cap of $2.07 billion, AppNet is trading at 18.5x TTM revenue, just slightly more than its TTM multiple of 15.3x at the beginning of the year, despite the 50% rise in stock price.
I thought AppNet was a good buy six weeks ago, when I placed it on internet.com's HotWatch 2000 list of 10 Internet stock picks for the year. And I think it's an even better buy now.
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