EASY Easylink Services Corp CL A (MM)

Dutton Associates issues its updated initial report coverage of EasyLink Services (Nasdaq:EASY) maintaining a Speculative Buy rating and a 12 month price target of $1.04. The 10-page report by Dutton senior analysts Paul Resnik, CFA and Joe Noel is available at www.jmdutton.com, and from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. The year 2005 was a difficult one for EasyLink. Revenues, reflecting continued shrinkage in Transaction Delivery Services (TDS) revenue and a temporary interruption in the growth of the Transaction Management Services (TMS) business, fell to $18.5 million in the fourth quarter. The stock responded to these difficulties by dropping almost 40% during the year, from $1.44 to $0.89, and has continued under pressure in 2006. Still, we believe the TMS business can form the basis of future growth and that the combination of improving product offerings and EasyLink's extensive customer base which includes over 400 of the Global 500, give the stock speculative appeal over the longer term. First quarter 2006 results and management guidance for the second quarter provided, in our judgment, reason to believe that the long-awaited turnaround for the Company is now beginning. Moreover, the successful completion of a $5.4 million common stock financing removes a significant concern for EasyLink shares. Although we believe EasyLink will likely fall slightly short of achieving a breakeven result for 2006, we have established a preliminary earnings per share estimate of $0.08 for 2007 and believe the shares can come to trade at 13 times this EPS level over the next 12 months. Accordingly, we now have a $1.04 price target for the shares and rating of Speculative Buy. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 29 analysts, primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 130 enrolled companies, and its institutional-quality research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $53,500 from the Company for 8 Research Reports with coverage commencing on 9/04/2002. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.