Digitas Get A Thumping (DTAS)

Shares in Digitas, the global interactive marketing company, have dropped sharply recently. The company's stock price is down over 15% today to below $9.50. The company's 52-week high is $14.99 and the low is $9.81. Most of the drop in the company's shares has been since May even though Jefferies & Co. initiated the stock as a "buy" in mid-June.

The drop in the stock does not have any rational explanation. First quarter revenue was up 27% to $175.3 million. Operating income was up 29% to $12.4 million. The company guided for a strong second quarter and year.

Year-over-year growth for 2005 compared with 2004 was $565.5 million, up from $382 million.

Digitas has over $182 million in cash and marketable securities. The company also owns several important interactive advertising companies including large ad agency Modem Media and Medical Broadcasting which offers digital services to healthcare marketers.

With its cash position backed out, Digitas trades at barely above one times sales, and that is too cheap, especially if Q2 numbers are good.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies he writes about.