According to an analyst at Robertson Stephens, CheckFree's (Nasdaq: CKFR) domination of electronic bill payment and presentment market will be stronger as competition wanes.
Robertson Stephens analyst Andrew Jeffrey said Friday that he reiterated his "buy" rating on the electronic bill payment and presentment (EBPP) and e-commerce company, adding that he believes investors should be "increasingly aggressive" in owning the company's shares.
Shares of CheckFree closed up 0.63 to 54.56 at market close yesterday.
According to a research note, Jeffrey believes CheckFree's competitive position is bolstered by the weakening of its two strongest competitors: Metavante and Spectrum.
Metavante recently withdrew its proposed IPO and shows evidence of weakening trends. Jeffrey noted that, despite Metavante having the only other live EBPP payment engine, its bill-payment business is only a fraction of CheckFree's. Without the IPO, this situation is not likely to change.
Similarly, Spectrum, a bank-backed EBPP, is in disarray, in Jeffrey's view, due to unrest among at least one of the consortium's founding banks as the company struggles to introduce its EBPP switch.
This is in contrast to Jeffrey's positive view of CheckFree's recent strengthening and consolidation. The company recently snapped up two major competitors, TransPoint and BofA's EBPP platform.
The one thing the analyst points out as a possible concern is the effect of impending acceleration of EBPP adoption on CKFR shares. While acknowledging that management at CheckFree does not address this issue beyond the next quarter, Jeffrey thinks that the combination of the competitive vacuum and CheckFree's marketing strategy bodes well for 2001.