WebEx: Premier Player in Web Conferencing 'Modestly Undervalued'

Credit Suisse’s Jason Maynard yesterday started coverage of WebEx (WEBX) with a Neutral rating and $50 price target. “In the short term, we believe WebEx’s shares are only modestly undervalued, post a strong close to 2006 and significant jump in the share price,” he wrote in a research note.

On February 1, WebEx shares jumped 20% following a strong earnings report.

Maynard says WebEX is “the premier player in the Web conferencing and collaboration market,” with “a vastly superior technology delivery platform and a pure On Demand model” which together “create long-term underlying value in the business.”

Maynard says he expects to see growing adoption of Web collaboration and conferencing over the next 3-5 years. For FY 2007, he sees $457 million in revenue and non-GAAP EPS of $1.65. He notes that the stock trades at about 16x enterprise value/cash flow; his price target is based on a multiple of 19x.

WebEx shares closed yesterday at $45.95.

WEBX 1-yr chart