Report Card: David Togut
Biography
B.A., Brown University; M.B.A., Columbia University. Togut began his career on the buy side, covering technology and energy at Fred Alger Management. After five years as a computer services analyst at Credit Suisse First Boston, he joined Morgan Stanley Dean Witter in 1996, where he is currently a managing director.
Industry Outlook and Style
Togut is cautious. Though he believes that strong growth prospects, reasonable valuations and high earnings visibility make the computer services sector attractive, he tries to focus on companies with accelerating, long-term earnings growth. Earnings, says Togut, can be powered by at least three factors: a restructuring, an aggressive shift to e-business and a new-product cycle. "Since most new products must have a high Internet content," says Togut, "it all boils down to e-business."
Togut expects his favorite stocks to benefit from several long-term trends, such as the accelerating growth of Web-based outsourcing opportunities. Leading his top picks is
Convergys
(CVG)
, an $8.4-billion company that provides customer service, technical support and telemarketing services. Togut anticipates strong demand from the Cincinnati company's top tech customers, including
Microsoft
,
Gateway
,
Compaq
and
Cisco
.
TheStreet Recommends
Togut also likes
Automatic Data Processing
(AUD)
, which has launched a new menu of Internet payroll processing products, and he's a fan of
First Data
(FDC) - Get First Data Corporation Class A Report
, which has developed new Internet payment processing methods through its
Western Union Financial Services
network. Togut describes this as First Data's strongest growth engine.
He expects
Computer Sciences
(CSC)
to reap the rewards of providing integrated, end-to-end e-business solutions to the tune of $1 billion next year. Interestingly,
James Kissane and
Mark Wolfenberger, the other two analysts profiled in this category, are not enthusiastic about Computer Sciences. (Morgan Stanley has investment banking relationships with Convergys and First Data.)
According to a buy-side analyst who voted in
TSC's
Analyst Rankings -- Equity 2000
survey, Togut has an "excellent grasp of the long-term drivers of the industry," and "knows what matters for the companies." He earned additional praise for his "great big-picture" understanding and his intimate knowledge of the companies themselves. Contributing to Togut's success is his number crunching: "Every quarter he goes through the 10Qs for all the companies and picks out the salient facts," said a voter. "No other analyst I know does that."
Stock Pick
Favorite stock for next 12 months:
Convergys
Comment:
"They're the dominant provider of wireless billing services in the U.S., and they've just launched a powerful new-product cycle in IP and GSM billing."
Rate Their Stock Picks:
Which stock do you like best?
Kissane: First Data
Wolfenberger: Sapient
Togut: Convergys
