Dutton Associates updates its coverage of Day Software (OTCQX:DYIHY) (SWX:DAYN) with a Speculative Buy rating and a price target of US$13.00 (CHF 80). The 7-page report by Dutton senior analyst Rafael Kapelinski is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. Merriman Curhan Ford & Co. has been selected by Day Software Holding AG as its Principal American Liaison (PAL) for listing on the OTCQX.
In our view, Day Software continues to see accelerating momentum and we believe that it should deliver a strong set of second half of 2007 numbers. We continue to make the case that Day Software's JSR 170 message should resonate well with mid-market accounts that are looking for a more cost-effective and standards-based complete Web content management (WCM) platform that allows them to eliminate the risk of a vendor lock-in. Also, in some cases, we believe that customers will purchase Day Software's modules as a complement to more complex and comprehensive WCM offerings from other vendors. In the large-enterprise market, in contrast, Day Software faces an uphill battle, in our view, against infrastructure companies such as BEA (BEAS: USD 14.07), IBM (IBM USD 117.00) and Oracle (ORCL USD 23.00) and their respective integrated-stack strategies on one hand, and the already well-established pure-play WCM vendors such as Vignette on the other. Based on our conversations with the Company's customers, we believe that Day Software generates a considerable return on investment by providing a complete, standards-based WCM solution. Based on our checks, Day Software has been increasingly successful in replacing vendors such as Tridion and Vignette (Nasdaq VIGN: $18.00), because the Company's solution provides superior functionality at an attractive price point. Day continues to trade at a discount to its peers on the P/E basis. In spite of the recent market jitters, the Company is trading at around P/2007E and 2008E of 11.9x and 16.7x, which we view as attractive given the adjusted (excluding the one-off tax benefit) anticipated 2008E EPS growth of 42%.
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Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 senior analysts, primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.
The cost of enrollment in our one-year OTCQX continuing research program is US $25,000 prepaid before commencement of our research activities, consisting of 2 Research Reports, typically published semi-annually, and Research Notes. Dutton Associates received $25,000 from Merriman Curhan Ford & Co., Day's PAL on the OTCQX, for 2 Research Reports and Research Notes with coverage commencing on 7/02/2007. The Firm does not accept any equity compensation. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.
