The reason for such a low stock price for CSGS is because 70% of the company's revenues are from 4 major telecomm. companies and 2 of those contracts must be negotiated and resigned during 2008. According to all the research I have read the company is worth $12.50 if neither of the 2 telecomm companies renew their contracts. I believe the chance that both of the 2 not signing a new contract has a very low possibility and more likely than not the company will reach agreements with both of them. The company provides billing services and the switching costs of these services are extremely high. I believe the only thing that will cause CSGS to loose a customer is if AT&T were to purchase Echo (one of the 2 company's up for contract renewal). Even if CSGS would lose Echo, they still are probably worth $15-16 / share, which is a 25% increase from current prices. If CSGS does not lose either client (likely in my opinion) the company is probably worth $18-22 per share, which is anywhere from 44-75% more than current prices.
$12.66 (02/01/08)
