Bankrate could rise on ads, a takeover-Barron's
NEW YORK, March 23 (Reuters) - Bankrate Inc RATE.O shares could rise as the financial information provider generates more advertising revenue, aided by a strong balance sheet that could make it a tempting takeover target, Barron's said in its March 24 edition.
The North Palm Beach, Florida-based operator of Bankrate.com surveys about 4,800 financial institutions and posts the best rates on such things as mortgages and home equity loans, certificates of deposit and money market accounts.
Barron's said the company has reduced its dependence on online mortgage advertising and increased revenue from products such as bank deposits, CDs and money market accounts.
Nonetheless, the shares have fallen 21 percent from their Feb. 4 high of $57.32, which Barron's attributed to worries that the mortgage crisis would hurt growth. Bankrate is also heavily shorted, with about 27 percent of its shares held by investors who expect a decline, Barron's said.
Yet Barron's said Bankrate is able to win and retain advertisers because of its track record in generating what analysts called "prime prospects" and "solid leads" to them.
It said further growth may come from China, where Bankrate plans soon to begin operating, or from a revamped Web site to make it easier to generate revenue from partners such as Yahoo, AOL and MSN.
At a Thursday closing price of $45.08, Bankrate trades at about 23 times expected 2008 earnings.
With a roughly $850 million market value, no debt, and about $125 million of cash and equivalents at year end, Bankrate would be a "digestible" takeover target for a company seeking more online ad offerings, Barron's said. (Reporting by Jonathan Stempel, editing by Richard Chang)
