Collins Stewart has published an updated review for software optimiziation solutions company BluePhoenix Solutions Ltd. (Nasdaq: BPHX; TASE: BPHX) in which it reiterated its "Buy" rating for the company and set a target price of $25, a premium of almost 40% over its current market price.
Noting the recent acquisition by BluePhoenix of Amalgamated Software of North America (ASNA), and the latter's recent ASNApalooza user conference in San Antonio, Collins Stewart notes, "We have been impressed by the quality of the ASNA team, the company’s loyal customer base, and the prospects for accelerated growth under the BluePhoenix umbrella. Over the years, ASNA’s principal focus was building a high-quality product set focused on migrating IBM midrange computers running RPG to Microsoft.NET. In fact, we learned that its code conversion success rate is usually over 90%.
"With its concentration on product, ASNA never built services offering to complement its migration tools. Instead, the company referred customers to independent consultants or solution providers who would help implement the projects. Now, under BluePhoenix, ASNA is being resourced with a service organization that we expect will enable BluePhoenix to capture meaningful incremental revenue opportunities. We believe BluePhoenix will be able to accelerate ASNA’s 16.8% average annual revenue growth over the past five years into the mid-20% range."
Collins Stewart believes that BluePhoenix's partnership with Microsoft is set to grow even further. "We learned that Microsoft has indeed been pushing ASNA to accelerate migrations to the .NET platform," it says. "As we have previously written, the Windows Server and Windows .NET markets are the largest and most robust. We expect BluePhoenix will engage rather quickly with Microsoft to discuss various ways the companies can collaborate in driving customers to .NET."
Collins Stewart concludes with an emphatic endorsement of BluePhoenix's potential. "Given the company’s vast market opportunity, industry-leading tools and experience, accelerating revenue and earnings momentum and compelling valuation, we continue to believe the shares have significant appreciation potential," it says.
BluePhoenix's share closed up 0.66% yesterday at $18.25, giving the company a market cap of $299 million.
Published by Globes [online], Israel business news - www.globes.co.il - on October 9, 2007
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