RedChip Visibility reports that it has issued an IT Group Holdings, Inc. (ITGL.OB) first quarter 2007 research update.
Joe Blankenship, MBA, CFA Level I Candidate, RedChip Research Analyst, wrote in the report:
“We maintain our BUY recommendation on ITGL with a 12-month price target of $1.80 per share.
The Company’s progress in adding new contracts with resellers has demonstrated the effectiveness of having its own switching capability. Additionally, their gross margin of 6.0 percent should continue to improve with new business.
“We have revised our revenue estimate for FY2007 from a previous estimate of $60 million to a current estimate of $50 million to reflect the time required for resellers to recruit customers.
We now expect the larger gains in revenue to occur in the last two quarters of the year. Accordingly, we have also adjusted down the revenue expectation for FY2008.
However, based on higher margin services we have increased our EPS estimate for FY08 to $0.08. Our twelve-month price target of $1.80 per share is based on a multiple of 22.5x the 2008 EPS estimate.
In addition, we based our twelve month target price on a 1.8x projected FY07 revenues of $50 million. This is in line with a close industry peer, DECC, which is trading at a 1.7x P/S (ttm).”
To receive a complimentary copy of the RedChip Visibility initial research for ITGL, please visit: http://www.redchip.com/visibility/about.asp?page=requestITGL_Q1_2007.
RedChip is an international small-cap research and financial public relations firm. RedChip delivers measurable results for its clients via a comprehensive platform of product offerings.
Let us hear your thoughts below: