CheckFree Corp. (Nasdaq: CKFR) shot up 44 1/4, or 65 percent, to a 52-week high of 112 1/2 Wednesday on reports that it's about to buy its biggest competitor, TransPoint Inc., for $1.16 billion.
Under the terms of the deal, which is expected to close within six months, CheckFree would exchange about 17 million or 23 percent of its shares for the ownership stakes held by Citigroup Inc. (NYSE: C), First Data Corp. (NYSE: FDC) and Microsoft Corp. (Nasdaq: MSFT).
On Wednesday, CS First Boston analyst James Marks reiterated its "buy" recommendation on the stock and set a 12-month price target of $110.
"In one blow, it has knocked out the only serious competitor it had in bill presentment, leaving CheckFree the clear leader in both bill payment and bill presentment,'' Marks said in research report.
CheckFree also signed a separate, five-year $120 million agreement to provide electronic billing and payment for Microsoft's applications.
CheckFree arranges for utilities and other billers to send bills to their customers through major Internet portals such as Yahoo! Inc. (Nasdaq: YHOO), where those customers can check their accounts and pay off what they owe.
Last quarter, CheckFree posted a loss of $4 million, or 8 cents a share, on sales of $73 million, up 22 percent from the year-ago quarter when it earned $11.3 million, or 22 cents a share, on sales of $59.6 million.
First Call consensus expects it to lose 12 cents a share in its third quarter.
Its shares fell to a 52-week low of 23 1/8 in August.
Thirteen of the 15 analysts following the stock maintain either a "buy" or "strong buy" recommendation.