I had no idea when I posted yesterday about two Israeli stocks to buy for a market bounce that one of the stocks I mentioned would spike more than 10%. Amdocs Limited (NYSE: DOX) is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and intentional customer experience at every point of service.
The company has experienced one heck of a 48 hours. On Tuesday there was the news that Sprint/Nextel Corporation (NYSE: S) is soft-launching a WiMAX network, and picked communications software company Amdocs to build and maintain the Xohm web portal and manage its customer service, billing, and other operations.
Even bigger is the news today that Amdocs signed a deal to provide support services to AT&T (NYSE: T), which one analyst estimated is worth more than $100 million a year. Wedbush Morgan analyst Scott P. Sutherland reiterated a "Strong Buy" rating on Amdocs, and estimated that the deal "is initially worth well over $100 million annually and has the potential to be even more."
Sutherland said in a client note that the contract initially calls for Amdocs to provide support for AT&T's (formerly Bellsouth's) legacy customer care and billing systems. Over time, however, "this could include modernization of those 30-year-old legacy systems with Amdocs' products. With 19 million BellSouth access lines, we believe the opportunity can be (about) $200 million annually over time," he added.
Amdocs said the contract is a "significant expansion" of an existing 7-year deal the companies signed in April, adding that it is "one of the significant deals" the company expected to sign in fiscal 2008, which ends in September.
The stock was attractive after getting hit of late. Just based on valuation with a P/E of under 20 and a PEG of 1, I thought this was a cheap stock. Now with this huge win, look for Amdocs to be a top performer in '08.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has a position and owns stock in DOX and is long the stock.He has no positions in any other stock mentioned as of 1/10/08.
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Reader Comments (Page 1 of 1)
1-10-2008 @ 5:43PM
beanspants said...
to be more specific, they are adding a contract to support AT&T Landline and cable services.
they already do a large amount of support and development for wireless billing.