Finextra50 up 1.2% led by ChoicePoint and Microgen

Finextra50 up 1.2% led by ChoicePoint and Microgen

The Finextra50 Financial Technology Index closed up 1.2% to 86.91 last week as Reed Elsevier's planned acquisition of ChoicePoint saw the latter's stock rise by 41%, while lower than expected quarterly results and outlook from Vasco Data Security saw its stock hit a 52 week low.

Major gainers
ChoicePoint was the index's biggest gainer last week, rising 41.64% to $48.10 after publisher Reed Elsevier announced it intends to buy the firm for $4.1 billion and integrate ChoicePoint with its LexisNexis Risk Information and Analytics Group to create a risk management business with $1.5 billion in revenues.

More than 50% of ChoicePoint's $982 million revenue and 80% of its business operating income from continuing operations in 2007 came from the insurance sector. After recent troubles including fines for misuse of consumer data, and flagging performance of new businesses it had acquired in recent years, it had recently put in place a turnaround plan, to divest non-core assets and focus on its core insurance sector. That did not stop the stock hovering around its 52-week low mark in January this year.

But with Reed Elsevier offering $50 per share in an all-cash deal, that valuation changed rapidly last week. The deal is still subject to shareholder and regulatory approval.

UK banking and asset management software firm Microgen also rose last week, finishing Friday up 19.25% on the previous week to 45.91p on a return to profit in its full-year results.

The company posted a pretax profit of £4.2 million from continuing operations for the year to 31 December 2007, from a restated loss of £10 million the previous year. Revenue increased slightly to £33.3 million from £32.7 million previously.

Three of the company's divisions - asset and wealth management, banking, and billing and database management - reported organic growth in the range of 4% to 15%. The company said it has a high level of recurring revenue and that it is exploring opportunities for further development including mergers and acquisitions.

Payments specialist Fundtech also rose on strong earnings last week, finishing up 12.68% to $12.44. It posted fourth quarter revenues of $29.4 million, a 27% increase year-over-year, and net income of $2.7 million or $0.16 per diluted share, for the fourth quarter of 2007 compared with net income of $1.6 million, or $0.10 per diluted share, the previous year.

In a separate announcement, Fundtech said it was adding to its cash management and corporate payments software line with the acquisition of Troy Group's ACH products for the US automated clearing house system.

Indian fintech stocks and outsourcing specialists also rallied last week:

  • Polaris rose 14.65% to Rs94.30
  • Firstsource was up 9.09% to $54.00
  • 3i Infotech finished the week up 8.27% to Rs128.30

Major losers
Vasco Data Security was the index's biggest loser last week, as its shares fell by 34.89% to close Friday at $11.40 - a new 52-week low. The company's fourth quarter earnings missed analyst expectations, as revenue expected from three large bank deals was delayed. The security software and hardware provider, which gets around 80% of its revenues from banks, reported fourth quarter net income of $3.3 million, or 9 cents per share, compared with $5.1 million, or 13 cents per share, a year ago. Revenue rose 24% to $31.2 million, but analysts were expecting $36.6 million, according to Reuters Estimates.

Other companies to see significant falls include Australia's Bravura Solutions, which continued its recent slide to close last week down 7.50% at AUD$1.48; and Pegasystems, which dopped 6.26% to $9.13.

Index comparison

More information on the Finextra50 Financial Technology Index methodology and constituent stocks can be found here.

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