PurchasePro comfy with estimates

PurchasePro climbed 15 percent Wednesday after it said it was comfortable with projections for the first quarter and fiscal 2001 following its recent acquisition.

PurchasePro (Nasdaq: PPRO) is a business-to-business e-commerce company that operates "procurement networks" designed to create efficiencies by connecting buyers and sellers over the Internet. Shares were up $1.50 to $11.75 on the Island ECN ahead of Wednesday's opening bell. The company topped estimates in its most recent fourth quarter, eliciting analyst praise.

The company said its statement was in response to "numerous investor and media inquiries following the announcement of its acquisition of BayBuilder."

On Tuesday, PurchasePro said it would buy BayBuilder, a maker of strategic-sourcing technology, for $15 million in stock and cash. The deal places Las Vegas-based PurchasePro in the rapidly growing strategic-sourcing industry, allowing it to provide software for companies of all sizes.

PurchasePro said it expects basic cash earnings per share for fiscal year 2001 to be in excess of 65 cents a share, or 59 cents a share diluted. First Call's consensus has the company bringing in 49 cents a share for the year.

Revenue for the fiscal year 2001 is anticipated to grow about 250 percent to more than $225 million, compared with $65 million in 2000. PurchasePro also said gross margin will be in excess of 90 percent for the year and that cash operating margins, excluding non-cash charges, will continue to increase to as high as 36 percent in the fourth quarter from more than 24 percent in the first quarter.

For the first quarter, the company expects revenue of more than $42 million, and basic cash earnings should top 10 cents a share.

Including the effects of the diluted share count from the acquisition, diluted cash earnings per share are calculated to be in excess of 9 cents per share for the first quarter and 59 cents for the fiscal year 2001.

"Given the uncertain economic backdrop, the reiteration of guidance is significant," Lehman Brothers analyst Patrick Walravens wrote in a research note.

Walravens added that while "it would be unrealistic to think that any software stock could escape a sustained economic downturn," PurchasePro is better positioned than others and remains his top rated B2B stock.