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The Knot And WeddingChannel: Just Married


Weddings are a $72 billion-a-year business, and The Knot (KNOT) (KNOT) is a major player. Already, its Web site is the biggest destination for bridal shopping and gift registry services, with 4 million monthly unique visitors. In August The Knot widened its online presence by acquiring WeddingChannel.com, the leading online bridal registry. The Knot also publishes several magazines devoted to weddings. Its stock has run up this year from 11 to 20. The Knot was featured in this column on Apr. 11, 2005, when it was at 7.20. Jeetil Patel of Deutsche Bank (DB) rates The Knot a "buy" because it offers investors exposure to the rise in online ads, which last year captured 10% of the $1.5 billion spent on wedding ads. He figures the purchase will add $29 million to sales and $14 million to earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2007. On a pro forma basis, Patel sees earnings of 44 cents a share on sales of $71 million in 2006 and 77 cents on $108 million in 2007. Richard Fetyko of Merriman Curhan Ford, who also rates The Knot a "buy," has raised his 2007 forecast from 70 cents a share to 78 cents.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial


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