Shares of S1 slide on revenue forecasts

The online financial services company hits $22--a far cry from its close of $129.25 in February. Shares have fallen more than 70 percent this year.

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Shares of S1 sank 22 percent today after two Wall Street investment houses released lower short-term revenue forecasts, while a third firm maintained its high rating of the online financial services company.

At the close of regular trading, shares of Atlanta-based S1 had fallen $6.06 to $22 on a volume of 5.9 million shares, nearly five times the stock's average daily volume of 1.3 million.

At one point during the day, the stock hit a 52-week intraday low of $19.88, compared with a 52-week intraday high of $142.25.

S1 shares have fallen more than 70 percent so far this year. S1 provides services to businesses, banks and individuals to conduct online financial transactions.

First Union Securities cut S1 to "buy" from "strong buy" today and lowered its revenue forecast for fiscal year 2000 to $265 million from $270 million. Analysts Charles Wittmann and Mark Tyler also cut their second-quarter revenue forecast to $59.1 million from $60.3 million and slashed their price target to $35 from $150. Earnings estimates were not changed.

In addition, ABN Amro lowered its second-quarter revenue forecast for S1 to $58 million from $60.5 million. Analyst Glenn Greene retained his "buy" rating, earnings forecast and price target of $65.

According to First Call, analysts expect S1 to post a per-share loss of $2.14 for the upcoming quarter.

Meanwhile, Goldman Sachs analyst Michael Hodes stood his ground on the stock. He reiterated his "recommended list" rating, with a 12-month price target of $215. He estimates that S1 will post revenue of $275 million in 2000.

The analysts who lowered their revenue expectations said S1, which relies on monthly revenue from licensing fees as opposed to up-front payment contracts, faces tough price competition.

First Union noted that companies such as Corillian have shown success with the up-front pricing model. The firm added that monthly licensing can generate more profit in the long term, but competitors who use the up-front model may siphon some of S1's business in the short term.

While the three S1 analysts have some differences about the short-term prospects, all said the company could be a leader in the long term. Hodes was the staunchest advocate, stating that S1's future will brighten as long as the company continues to add new customers and adds more products to sell to existing clients.

Hodes noted that heavy hitters in the finance industry such as Zurich Financial Services, Allianz AG, FleetBoston, JP Morgan and State Farm have made equity investments in S1.