Bankrate Soars on Acquisitions, Upgrade

Shares of Bankrate Inc. (RATE) soared almost 22% Monday after the bank-rate information aggregator announced two strategic acquisitions, and a Citigroup analyst upgraded the stock. Bankrate said Monday it is acquiring Nationwide Card Services, which markets a line of consumer and business cards via the internet, for $26.4 million. "NCS's affiliate network and strong platform, combined with our organic traffic, should provide the foundation for significant revenue growth in our credit card channel and a much better credit card offering to our consumers," Bankrate CEO Thomas R. Evans said.

It also announced it acquired Savingforcollege.com, an internet portal for objective information about 529 college savings plans, for $2.25 million. "Our acquisition of Savingforcollege.com adds a wealth of great content and another source of organic Internet traffic to Bankrate," Evans said. "The valuable content of Savingforcollege.com will attract consumers to Bankrate's college financing area and enable us to leverage this new addition with our advertisers."

Also Monday, Citigroup analyst Mark Mahaney upgraded the shares to Buy from Hold, despite advising caution in buying anything to do with mortgage/financial services. Mahaney said that in checks with Bankrate advertisers, they indicated continued commitment to spending, and noted new growth initiatives could be material in the coming year. He also appreciates that the firm has diversified away from mortgages, and said the shares are attractive at 10x 2008 Ebitda [earnings before interest, taxes, depreciation and amortization], noting the company holds $7.20/share in cash.

Sources: Press release, Barron's
Additional Reading: Bankrate Q3 2007 Earnings Call Transcript

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