Web.com (WWWW) Price Target Raised at Roth Capital

Roth Capital issued a report today on Web.com (WWWW), formerly Interland (INLD), and provided a price target of $8 per share or 30% above current levels.

There was not much new in the report, that has not been already covered by CasinoCapitalism.com. An interesting point to consider though, is that the Roth´s revenue estimates are probably too high and its earnings numbers are too low. I generally dislike when analysts start covering a stock I own because it increases volatility in the stock as institutional investors begin to focus on quarterly numbers, rather the bigger picture. However, in this case, the sell-side report may prove beneficial to shareholders of Web.com (WWWW), formerly Interland (INLD), because as the company beats bottom-line forecasts the stock could move higher.

The bottom-line is that Web.com (WWWW) has an extremely profitable business which is being masked by legal costs and a G&A expense base that is still way too high. Fortunately, new management has reduced expenses somewhat, but there is a lot of work still to be done. At the same time, the company has little additional fixed costs that need to be added in order to see increased revenues.

My prescription for Web.com (WWWW) management is simple:

• Cut more costs
• Upsell higher priced services to existing clients (amazingly the company offers only one e-commerce package and a poor one at that; they don´t offer a good email marketing solution either).

Those two simple strategies alone should do the trick to get us to $10+ and beyond. The whole consumer Internet strategy is flawed in my opinion, but I´m willing to wait to see what transpires since the current customer base has tremendous value. Interestingly, WSPI hit a new high today. As long as WSPI, continues to move up, Web.com (WWWW - Interland - INLD) remains undervalued.