Monday, August 21, 2006

Calls of Note Part 1

- ThinkEquity comments on Move (NASDAQ:MOVE) reiterating their Buy rating and $9 price tgt. Firm notes MOVE shares have been under pressure recently in sympathy with a sagging housing market. While sentiment is negative, the underlying fundamentals and trends for MOVE are perhaps stronger than ever, creating an excellent buying opportunity for a long-term sector winner, in firm's view. MOVE's current investment phase should begin driving top-line momentum and operating leverage heading into FY07 as the company completes the transition to CPC pricing, launches its community products and introduces new Web site features like mapping upon the 4Q06 data center move.

As a media business, MOVE's keys are audience size/growth and advertising demand both of
which have been trending strongly. MOVE's Web site traffic grew 5% in July/ June (source: Comscore) and advertising demand has been accelerating as real estate professionals are seeking greater efficiencies in higher-return marketing channels, e.g., the Internet, in the face of a housing downturn. Not only should MOVE, as the dominant on-line real-estate destination, continue to benefit from the overall growth of users/ad dollars online, evidence suggests that a weakening housing market may be a catalyst for its business.

MOVE trades at 10x FY07E EV/EBITDA vs. FY07E EBITDA growth of 153%. Firm's price target of $9 assumes 27x FY07E EV/EBITDA vs. a projected three-year EBITDA growth rate of over 100%.

Notablecalls: Not actionable but good to know category.

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