Wall Street Eyes Energy Software Giants
Deutsche Banc Alex. Brown analyst Ed Tirello initiated coverage
of Caminus Corp. with a Strong Buy rating, predicting that the
energy industry's spending on information technology and software
would grow significantly in the next few years.
Caminus has developed energy commodity transaction and risk
management software for various industries, including the electric
and natural gas sectors.
Tirello believes Caminus should benefit from deregulation both
in the U.S. and in Europe because developing competitive markets
require new information technology. "We predict energy industries'
spending on energy software technology to grow by 30-40% per year
and we think a large part of this investment will go straight to
third-party vendors, as opposed to internal development, because it
is a readily available and cost effective alternative."
Tirello believes Caminus' recent merger with Nucleus Corp.
created a superpower in the industry by broadening Caminus'
products and services offering, while creating opportunities to
reduce overhead, cross-sell products and enhance the talent pool at
the firm. "With the recent acquisition of Nucleus, we believe the
company now offers the premier package of transaction and risk
management software," he said.
He expects Caminus' revenues to grow 82% this year and 42% next
year with gross profit margins remaining at about 72% in each year.
His 12-18 month stock price target is $47. The company's stock
jumped 12% yesterday to $43.62/share.
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