Fri Jul 14 08:35:49 2000
(FIRST CALL) SECU: ESPD: UNDISCOVERED B2B JEWEL POISED TO TAKE OFF IN OUR VI
SECU: ESPD: UNDISCOVERED B2B JEWEL POISED TO TAKE OFF IN OUR VIEW.
08:35am EDT 14-Jul-00 Prudential Securities (B.KEANE 415-274-4431) ESPD
ESPD: UNDISCOVERED B2B JEWEL POISED TO TAKE OFF IN OUR VIEW.
Prudential Volpe Technology Group July 14, 2000
Subject: eSpeed, Inc. (ESPD-42 15/16)--NASDAQ
Current: Strong Buy
Analysts: Bryan C. Keane (415) 274-4431
Thomas J. Puricelli (415) 274-4484 RISK: High
12-Month Target Price: $68
Ind. Div.: -- Yield: -- Shares: 51.5 mil. 52-Wk.Range: 89 7/8-22
EPS FY Year P/E 1Q 2Q 3Q 4Q
Actual Dec/99 $(0.28) $(0.01) $(0.06) $(0.08) $(0.13)
Current Dec/00 $(0.82)E NM $(0.10)A $(0.22)E $(0.25)E $(0.26)E
Current Dec/01 $(0.46)E NM $(0.21)E $(0.15)E $(0.10)E $ 0.00E
eSpeed provides complete B2B marketplace platforms that enable the trading of
any financial or commodity product electronically. The Company is focused on
large, inefficient markets that can benefit from eSpeed's electronic
infrastructure, providing real-time trading capabilities and straight through
o While the B2B Internet stocks have been sparked this week as a result of
Ariba's blow-out earnings report, we believe eSpeed has been undeservedly absent
from this run-up. The Company has been experiencing new heights in marketplace
adoption levels and should deliver a solid earnings report on July 25th, in our
opinion. We believe ESPD will deliver upside to our 2Q00 estimates of $21.49
million in revenue and $(0.22)in EPS.
o Even with positive momentum, eSpeed has only traded up 2% this week while
its B2B peer group has appreciated over 25%. We believe eSpeed remains extremely
attractive when valued on a forward looking revenue multiple basis, as it is
trading at 14.5x 2001 revenues, while our B2B peer group (consisting of Ariba,
Commerce One, Broadvision, Vignette, i2 Technologies, and FreeMarkets) trades
above 24x estimated calendar 2001 revenue.
o While other B2B enablers are scrambling to set up exchanges within
industries where no formal market exists, eSpeed is digitizing the established
global financial and commodity marketplaces. We believe that eSpeed is
negotiating to partner with more incumbent industry players, similar to Dynegy
and Williams in the Energy market.
o eSpeed continues to be the beneficiary of huge adoption levels within its
fixed-income marketplaces as it pushes costly traditional trading methods to
electronic trading. eSpeed provides a solution that enables customers to receive
increased access to pricing, a real-time risk managed portfolio, and trading
commission savings exceeding 50%.
o We reiterate our Strong Buy rating and $68 price target based on a 23x
multiple of our 2001 revenue estimate of $152 million and backed by a 10-year
DCF analysis. We encourage investors to take a position in this B2B
infrastructure leader as it expands its market share in many financial and
Prudential Securities Incorporated and/or its subsidiaries makes a primary
over-the-counter market in the shares of eSpeed, Inc., Ariba, Commerce One,
Inc., BroadVision, i2 Technologies, and Freemarkets, Inc.
Prudential Securities Incorporated (or one of its affiliates) or their officers,
directors, analysts, or employees may have positions in securities or
commodities referred to herein, and may, as principal or agent, buy and sell
such securities or commodities.
First Call Corporation, a Thomson Financial company.
All rights reserved. 888.558.2500
[SU COM.1 CUS.1 CNA.1]