67 WALL STREET, New York - November 30, 2012 - The Wall Street Transcript has just published its Business and Application Software Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Application Software Consolidation Activity - Cloud Computing and SaaS Trends - Health Care Transition to ICD-10 - Outsourcing and Offshoring Trends
Companies include: CoStar Group Inc. (CSGP), Global Payments Inc. (GPN), Heartland Payment Systems Inc. (HPY), Fidelity National Information (FIS), ACI Worldwide, Inc. (ACIW), Bottomline Technologies Inc. (EPAY), Total System Services, Inc. (TSS) and many others.
In the following excerpt from the Business and Application Software Report, an expert analyst discusses the outlook for the sector for investors:
TWST: Is there any company specifically from your group that you believe is doing a good job of meeting current customer demand?
Mr. Huff: I think there is, and one core-processing company that I think is doing a particularly good job and has, I think, meaningful upside as a result is Fidelity National Information Services (FIS), and especially relative to its valuation, which is the lowest of the group at about 7.5 times forward EBITDA, and then 11.5 times forward free cash. We think they have a unique opportunity to serve the largest banks in the United States and around the world. We think they have the strongest market position serving that large bank segment. And it's hard for other people to serve that segment as profitably as they can. They have the products that the scale big banks want. They have the very wide distribution, internationally. The combination of those things, I think, makes them very well positioned.
In terms of another smaller-cap company that I think is well positioned to serve banks - I think that ACI Worldwide (ACIW) is a good one. They focus mostly on payments, but they also have some other products they sell, and they also sell to the largest banks in the world. The reason we like them is that their product is very unique, and so their market position is very strong. There are not many great alternatives to the products that they sell. It's vital to banks in terms of serving their customers.
And another company that we like is called Bottomline Technologies (EPAY). They have a mixed group of products, but the products that we think are most interesting are split between serving corporate customers and serving banks. The corporate customer product that we are most interested in is called Legal eXchange that helps corporates manage their legal spend. And the other one is called Paymode, and that is a business-to-business payments network that they sell to banks, who in turn sell it to their corporate customers. And the reason we think those are interesting products is because they are software-as-a-service products. We think they're very high growth and, we think, that add scale; they are very high incremental margins. And these two products in particular we don't think have a lot of competition, and therefore, we think their market position is very good in a fast-growing couple of verticals.
TWST: Along the same lines, which geographic markets are exhibiting the most robust demand for business services and which companies are serving those markets or poised to enter markets that are still emerging?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.