BlueStone Capital Partners, L.P. Announces Investment Opinion StarMedia Networks, Inc.Business Editors NOTE TO EDITORS: The following is an investment opinion issued by BlueStone bluestone, common name for the blue, crystalline heptahydrate of cupric sulfate called chalcanthite, a minor ore of copper. It also refers to a fine-grained, light to dark colored blue-gray sandstone. Capital Partners, L.P. NEW YORK--(BUSINESS WIRE)--March 27, 2000 Initiating Coverage of StarMedia Networks, Inc. With 1-1 Rating Senior Analyst Kathleen Heaney initiates coverage of StarMedia Networks, (STRM STRM Stream (US Postal service standard street suffix) STRM Starmedia Network, Inc. (stock symbol) STRM System Trouble Report Menu STRM Streamer - NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on - $36.25) with a 1-1 Outperform-Outperform investment rating and sets intermediate-term Intermediate-term Typically one-ten years. intermediate-term Of or relating to an investment with an expected holding period somewhere between short-term and long-term. price target of $45 and long-term target price of $52. ANALYST SUMMARY We are initiating coverage of StarMedia Networks, the dominant online network targeting Latin American markets and the Hispanic market in the U.S., with a 1-1 (Outperform-Outperform) investment rating. As the leading online media portal in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , the fastest-growing region for Internet use and the only company offering a truly pan-regional approach, we believe that StarMedia is well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. its leading position, even in the face of greater competition. Similar to Yahoo! (YHOO-NASDAQ-$194-Not Rated) and other leading U.S. online companies StarMedia is an innovator and leader in Latin America. In addition, due to its first-mover advantage First-mover advantage is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match. and early establishment of the brand, we believe that the company has created significant barriers to entry. At the current price ($36.25), the shares are trading at 47 times and 22 times our projected 2000 and 2001 revenue, respectively, which represents a premium to most of the U.S. comparables, but is justified in our opinion, given its superior growth prospects. On a market capitalization/registered user basis, the shares are also trading at a premium. We believe that StarMedia is being rewarded with a premium valuation because of its superior growth rate, market potential in Latin America, first-mover advantage, brand equity, and management's ability, to date, to execute its strategy. Nevertheless, despite, StarMedia's powerful brand equity, leading position and compelling business model, the shares are trading at a discount to its local peer Terra Networks Terra Networks, S. A., usually referred to as "Terra", is an Internet multinational company with headquarters in Spain. Part of Telefónica Group (the former Spain's public telephone monopoly and now one of the most important telecommunications companies in the world), Terra in terms of revenue and user multiples. Given the company's superior business model, strong brand and first mover mover /mov·er/ (moo´ver) that which produces motion. prime mover a muscle that acts directly to bring about a desired movement. advantage we believe that multiple expansion is justified. Our target prices are $45 in the intermediate term and $52 in the long term. At the current price, the shares are 48% below the 52-week high of $70.00 and 28% below the recent high of $50.00. We view this as an attractive entry point for investors given that we expect the company to report accelerating revenue growth along with further alliances and acquisitions that will further strengthen the brand. Looking ahead, we believe that investors will begin to react favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. as the company continues to fine-tune its strategy and further announcements of acquisitions, strategic alliances, and joint ventures are forthcoming. Excluding any takeover announcement, catalysts for further stock price appreciation could include quarterly earnings surprises, major marketing and/or advertising deals, alternative distribution platforms, and additional e-commerce initiatives. BlueStone Capital is a full service investment banking and brokerage firm focused on identifying investment opportunities in the emerging growth sector. BlueStone Capital assists clients in maximizing their growth by providing sophisticated investment strategies that are designed to achieve clients' strategic, operating and financial goals. |
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