Worst Wall St Analyst Call Of The Week:Savvis
Stocks: (SVVS)(AKAM)
Janco Partners moved Savvis from “hold” to “accumulate” on August 23. Word came out two days later that the short interest in Savvis was up 245% from July to August when it hit 1.79 million shares. Savvis trades 200,000 shares on a good day.
Savvis offers storage and bandwidth to transport video and data over IP. It was spun out from Bridge Information Services, which promptly went bankrupt. In the June quarter, the company did $190 million in revenue and $6 million in operating income. Interest payments took the operating profit to an $11 million net loss.
Savvis has total liabilities of $598 million in liabilities, including $275 million in long-term debt. It has only $461 million in total assets. The company’s debt has covenants that restrict is ability to borrow, buy back stock or pay dividends.
Savvis also went through a 1-fo-15 stock split in June to get the price of its shares up.
Savvis is also competing against Akamai in many of its core business. Akamai is larger, has a much better balance sheet and has over 80% of the content delivery business in the US.
The company’s stock has already run from $7.35 in November to over $25 now. It is difficult to see what catalyst will take it higher.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies that he writes about.
Janco Partners moved Savvis from “hold” to “accumulate” on August 23. Word came out two days later that the short interest in Savvis was up 245% from July to August when it hit 1.79 million shares. Savvis trades 200,000 shares on a good day.
Savvis offers storage and bandwidth to transport video and data over IP. It was spun out from Bridge Information Services, which promptly went bankrupt. In the June quarter, the company did $190 million in revenue and $6 million in operating income. Interest payments took the operating profit to an $11 million net loss.
Savvis has total liabilities of $598 million in liabilities, including $275 million in long-term debt. It has only $461 million in total assets. The company’s debt has covenants that restrict is ability to borrow, buy back stock or pay dividends.
Savvis also went through a 1-fo-15 stock split in June to get the price of its shares up.
Savvis is also competing against Akamai in many of its core business. Akamai is larger, has a much better balance sheet and has over 80% of the content delivery business in the US.
The company’s stock has already run from $7.35 in November to over $25 now. It is difficult to see what catalyst will take it higher.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies that he writes about.
posted by douglas mcintyre at 5:02 AM
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