NEW YORK, June 27, 2003 (PRIMEZONE) -- Stockgroup Information Systems (OTCBB:SWEB) (TSX Venture Exhchange:SWB) has been assigned a rating of "Speculative Buy" and is trading at the "low end of a comparable price to revenue multple," according to Investrend Research analyst Ryan C. Fuhrmann, CFA, who is transitioning coverage from Michael Whitney, CFA.
The full report, along with important disclosures and disclaimers, is available at www.investrendresearch.com, at http://www.investrend.com/articles/secondlevel.asp?level=182
Fuhrmann said a target valuation and earnings model will be provided following the company's next earnings announcement. Whitney had assigned the company a $0.55 to $0.65 per share target valuation in November, 2002.
Subsequently, said Fuhrmann, Stockgroup has announced the elimination of its convertible note and all remaining long-term debt. "The earnings announcement on May 16 detailed quarterly revenue growth of 36% over the same year earlier period and 9% quarter over quarter," and the company's partnership with the Associated Press is the "most significant event in company history."
The analyst stated that "debt was reduced by 23%, or $400,000, from $1.8 million to $1.4 million and has subsequently been eliminated. Gross profit increased to 74% year over year (from 63%) as revenue grew and cost of revenue decreased by 5%. Gross profit expansion demonstrates the scalability of Stockgroup's operations. Operating loss stood at ($252,155) due largely to a 45% increase in G&A expense that resulted in a large increase in payroll expense. Net loss for the quarter stood at ($468,185), or ($.02) per share.
"Weighted average shares outstanding for the quarter nearly doubled to just over 20.5 million shares from just fewer than 10.8 million shares in Q1 2002. Share issuance resulted from the acquisition of Stockhouse and exchange of convertible notes," noted Fuhrmann.
"Stockgroup continues to sign high-profile clients and partnerships, including Microsoft (Nasdaq:MSFT) and the Associated Press," and it is clear that the company possesses an appealing and useful product to offer its clients, witnessed by the signing of high profile clients and appealing gross margins. We are expecting the Company to achieve near break-even operating results for 2003," Fuhrmann concluded.
The company is enrolled in Investrend Research's unique and pioneering professional analyst program, which facilitates independent analysts to provide financial coverage for shareholders and investors in companies that otherwise would have little or no analyst following. Institutional coverage enrollment fees vary, up to $25,800 per year. Stockgroup is paying the enrollment fee for this coverage. The program is the largest in the world and includes a number of safeguards to reduce or eliminate conflict.
Ryan C. Fuhrmann, CFA covered the Health Care industry as a member of the MBA Investment Fund, LLC, at the University of Texas McCombs School of Business. He currently follows energy and technology companies as a valuation consultant. He previously covered the biotechnology industry for Houston-based money management firm Dyer, Robertson & Lamme. Prior to this he was a portfolio manager in Chicago at Northern Trust Company where he managed individual discretionary and non-discretionary trust accounts. Mr. Fuhrmann is a Chartered Financial Analyst, member of the Association for Investment Management and Research (AIMR) and the Dallas Financial Analyst Society (DSFA).
Investrend Research has been a leading independent equity research publishing and distribution program since 1996, with over 68 AIMR-qualified professional analysts posting more than 550 reports to date. Anyone may enroll a company for coverage. Enrollment fees vary, up to $25,800 annum for full Institutional coverage. The fee for this coverage is being paid by Stockgroup. Analysts are paid in advance for their initial reports by Investrend to insure independence, and no one associated with Investrend may own or trade in the equities of companies under coverage.
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Contacts:
Stockgroup Information Systems Inc., John Bevilacqua, Corporate Communications, (800) 650-1211, ext.180, ir@stockgroup.com. Web site: www.stockgroup.com
Investrend Research Div., Investrend Communications, Inc.: (718) 896-5060, R. Hempel, email: info@investrend.com. Web site: www.investrendresearch.com