NEW YORK, Aug. 25, 2004 (PRIMEZONE) -- The following is an investment opinion issued by Investrend Research Syndicate:
Investrend Research analyst Ryan Fuhrman, CFA, has released an Institutional Research Update on Stockgroup Information Systems (OTCBB:SWEB) (TSX Venture Exchange:SWB), retaining a "Speculative Buy" and reiterating a target valuation of $ 0.60.
The analyst said his valuation is based upon, "an updated comparable analysis and discounted earnings model."
The full report, including important disclosures and disclaimers, is available at www.investrendresearch.com
According to Fuhrman, "Q2 revenue growth continued to be robust; increasing 72% to $1.2 million, as compared to Q2 2003. For the six-month period ended June 30, 2004, revenue increased 73%." He reiterates 2004 revenue estimates of $5.1 million and believes this estimate could prove to be conservative. Fuhrman estimates a positive EPS of $.01 in FY2004 and positive free cash flow for the full-year period.
"We believe Stockgroup visibility is improving and the business model initiated three years ago is succeeding. Substantial doubt about the Company's ability to continue as a going concern was eliminated from the financial statements at the beginning of 2004.
"The elimination of all long-term debt and cash and equivalents of $1.4 million definitely leaves SWEB better in control of its own destiny. However, we would like to see a higher level of net income and consistency in generating positive operating cash flow (which was positive in Q4 '03 and Q1 '04) and free cash flow going forward."
Fuhrman noted the company has tax loss carry forwards in Canada (expiring 2006-2008) and in the US (expiring in 2019-2022). "These carry forwards will prove valuable once the Company achieves profitability."
The analyst said the company's "three main drivers of success going forward are:
"AP Relationship -Growth beyond the next 12-18 months rests primarily in a sales 'breakthrough' as a result of the AP relationship;
"Slowdown in SG&A expense -- Stockgroup is spending heavily on sales and marketing to drive revenue. S&M growth will need to lag revenue growth for consistent profitability to be achieved; and
"Consistently generated positive cash flow and positive EPS for 2004."
In conclusion, Fuhrman said, "investment in Stockgroup is speculative but appears to offer more upside potential than downside risk."
The analyst's credentials are at http://www.investrend.com/articles/secondlevel.asp?level=238
Stockgroup Information Systems is enrolled in Investrend Research's pioneering professional research program and has paid a continuous Institutional Coverage fee of $29,800.
Complete information about this company is available at the company's InvestorPower page at http://www.investrend.com/company/list.asp?sPathParam=yes , and the full report is available at www.investrendresearch.com . Investors are advised to read disclosures carefully before trading in the equities of any enrolled company.
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