Digital River up after analyst says McAfee deal possible
By APFriday, March 12, 2010
Digital River up on possible McAfee deal
NEW YORK — Shares of Digital River Inc., which provides technology and services for companies that sell products online, got a boost Friday after an analyst said McAfee Inc. may be testing out its e-commerce technology.
A deal would be a boost to Digital River.
“We came across several fully functional McAfee sites in various geographies, languages and currencies, which were being powered by Digital River,” wrote JMP Securities analyst Sameet Sinha in a note to investors.
“We could not verify this with management, but we believe that these are preliminary tests for now and no formal contract has been reached,” he added.
A representative for Digital River could not immediately be reached for comment.
If McAfee, a security software maker, signs a deal with Digital River, Sinha estimates this could boost Digital River’s 2011 adjusted earnings before interest, taxes, depreciation and amortization by 15 percent or more, provided a McAfee’s “entire consumer business — new sales and renewals — in all geographies is moved to Digital River.”
The analyst expects 2011 adjusted EBITDA of $97.9 million, which compares with Wall Street’s average expectation of $93.7 million.
Sinha kept a “market outperform” rating on Digital River and raised his target price to $34 from $31.
Shares of Eden Prairie, Minn.-based Digital River rose $1.71, or 5.8 percent, to $31.02 in afternoon trading. The stock has traded in the 52-week range of $21.83 and $41.20.
