- Two firms are defending Digitas (NASDAQ:DTAS) with shares down approximately 20% over the past two weeks on what they believe is unfounded speculation over a significant customer loss.
* Piper Jaffray saying they would be aggressive buyers of DTAS at current levels calling the valuation attractive (9x 2007 EBITDA vs. 12x for ad services group).
Firm's talks with American Express on Thursday suggest that Digitas' position as American Express' agency of record for Interactive remains solid. American Express indicated that it is not putting out for bid any of the key areas in which Digitas works with American Express, including the Commercial Credit Card segment. American Express did indicate that they often speak with different agencies about new projects, and the firm believes this could have been an area of confusion.
Further, American Express noted that Digitas is thoroughly integrated into the company's marketing platform and it is highly unlikely that they would suddenly switch to another agency. Maintains Outperform and $16 tgt.
* Deutsche Bank is also defending DTAS noting that on Thursday, the market reacted to reports that American Express is in talks with competing agencies for its commercial card advertising and marketing business currently serviced by Digitas. The portion of the account reportedly up for review may represent between 30-60% of the entire Amex account, which in total accounted for 26% (~$88.5M) of 2005 fee revenue.
Firm says that despite their channel checks with multiple senior-level digital agency execs, they have been unable to validate whether the account is up for review. If a significant piece of Amex was in play, these individuals would likely have heard about it, which leads them to believe that the business up for review is small.
Thinks the stock is currently discounting the worst case scenario. Maintains Buy and $15 tgt.
Notablecalls: Not actionable but good to know category.
* Piper Jaffray saying they would be aggressive buyers of DTAS at current levels calling the valuation attractive (9x 2007 EBITDA vs. 12x for ad services group).
Firm's talks with American Express on Thursday suggest that Digitas' position as American Express' agency of record for Interactive remains solid. American Express indicated that it is not putting out for bid any of the key areas in which Digitas works with American Express, including the Commercial Credit Card segment. American Express did indicate that they often speak with different agencies about new projects, and the firm believes this could have been an area of confusion.
Further, American Express noted that Digitas is thoroughly integrated into the company's marketing platform and it is highly unlikely that they would suddenly switch to another agency. Maintains Outperform and $16 tgt.
* Deutsche Bank is also defending DTAS noting that on Thursday, the market reacted to reports that American Express is in talks with competing agencies for its commercial card advertising and marketing business currently serviced by Digitas. The portion of the account reportedly up for review may represent between 30-60% of the entire Amex account, which in total accounted for 26% (~$88.5M) of 2005 fee revenue.
Firm says that despite their channel checks with multiple senior-level digital agency execs, they have been unable to validate whether the account is up for review. If a significant piece of Amex was in play, these individuals would likely have heard about it, which leads them to believe that the business up for review is small.
Thinks the stock is currently discounting the worst case scenario. Maintains Buy and $15 tgt.
Notablecalls: Not actionable but good to know category.
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