Wells Fargo Initiates Coverage on SAVVIS, Inc. (SVVS) with a Market Perform

November 24, 2009 4:35 PM EST

Wells Fargo initiates coverage on SAVVIS, Inc. (Nasdaq: SVVS) with a Market Perform rating. Valuation at $13-15.

Wells analyst says, "Longer term, we think SVVS is well positioned because the hosting industry could enjoy strong growth as IT infrastructure outsourcing should become more prevalent in the enterprise market. While SVVS has exposure to growth segments of collocation and managed hosting/cloud computing, we have concerns related to revenue trends going into 2010 and believe that current Street estimates could be too high. Our 2010 revenue and EBITDA estimates of $879MM and $211MM are slightly below the Street at $896MM and $222MM...While a weak economy has pressured IT spending, outsourcing with SVVS presents a way for companies to save money. SVVS estimates that by running a company's IT infrastructure, it can save 20-30% on costs versus doing it in-house, which helped drive new customer growth in H1 2009...While SVVS has exposure to growth segments of collocation and managed hosting/cloud computing, we have concerns related to revenue trends going into 2010 and believe that current Street estimates could be too high."

To see all the upgrades/downgrades on shares of SVVS, visit our Analyst Ratings page.

SAVVIS, Inc. provides managed information technology services to businesses and government agencies worldwide

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