StreetBeat: eToys
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Continued from: eToys.htm
Briefing.com: In July, eToys announced the acquisition of BabyCenter.com, an
e-commerce, content and community site for new and expecting parents. Do you see this
acquisition as complementary to their core business? Are more acquisitions likely to
follow?
Mitch Bartlett: Absolutely, we view this acquisition as highly
complimentary to their core business. Again, this is a good offensive and defensive move
by eToys. They have positioned themselves to be a strong and influential site during an
emotional time in a family. This gives them an enormous branding advantage. Through
BabyCenter.com, eToys will be uniquely positioned among the competition. Expecting parents
will be introduced to the eToys brand, as well as extensive baby merchandise.
BabyCenter.com will allow eToys to track a child's age through their toy buying years, and
increase the lifetime value of each customer.
As far as further acquisitions go, eToys is highly focused on being just for kids. If
additional acquisitions do occur, we would look for geographic rather than product based
acquisitions.
Chris Vroom: Management's acquisition of BabyCenter.com, one of the best
content and community sites on the web, underscores the acuity of their long-term vision.
By combining BabyCenter's strong customer relationships with eToys commerce expertise, the
Company has developed the best platform on the web to offer parents a total solution.
They will be able to effect personalization to a degree that no other site can match. We
see additional acquisitions that will strengthen the Company's already solid relationship
with customers.
Briefing.com: What is your current rating, price target and earnings growth rate
projection on ETYS?
Mitch Bartlett: We currently rate eToys, neutral, and as such have
no formal price target on the stock. Our earnings projections for March 2000 through March
2002 are (1.28), (1.26) and (1.36) respectively. Revenues for the same period are
estimated at 124.7M, 241.1M and 404.7M.
Chris Vroom: We rate ETYS common shares "strong buy" with an
$85 price target. Our long-term growth assumption is 75%.
