Analyst Safa Rashtchy says he has increased confidence that the Internet service provider will exceed his recently raised first-quarter subscriber growth estimates due to strong growth shown in the latest subcriber data. He notes first-quarter results are due out Oct. 30; outperformance could result in increased guidance going forward.
Given this outlook, and the recent drop in United Online shares, he views the stock as attractively priced. He says the stock came under pressure recently on news of limited price drops by Internet service provider competitors. Rashtchy notes United is now trading at 10.8 times his 2004 EBITDA estimate, well below the group average of 20 times.