Morgan Stanley begins research coverage on SiteMinder with an Equal-weight rating after balancing up high quality recurring revenues against a demanding valuation, high cash burn and lack of leverage to a travel recovery.

SiteMinder's software initially helped hotel's manage rates and occupancy (and avoid double-bookings) and then evolved to include a property management system for small hotels. Separate modules provide payments, marketing and guest communication tools.

In the broker's bull case scenario the company would add more features to its offerings, become the distribution platform of choice for smaller hotel operators and show an accelerated path to free cash flow. A $2.90 target is set.

Sector: Software & Services.

Target price is $2.90.Current Price is $3.02. Difference: ($0.12) - (brackets indicate current price is over target). If SDR meets the Morgan Stanley target it will return approximately -4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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