Back to top

Analyst Blog

Leading e-commerce services provider Digital River, Inc. (DRIV - Snapshot Report) recently expanded its Digital River World Payments solution with the addition of American Express’ (AXP - Analyst Report) full card acceptance services. 

Digital River offers a full range of payment processing services to clients through its subsidiary Digital River World Payments. These services include multiple payment methods, fraud management, tax management, cloud-based billing and other payment optimization services.
 
For American Express, Digital River World Payments will operate as a single commercial, technical and operational connection for online merchants offering American Express as a payment option on their e-stores around the world. 
 
The agreement provides an opportunity of expansion for Digital River along with consolidating its card acquiring services and strengthening its position as a leading turnkey e-payment solution provider.
 
Digital River aspires to be a cloud-commerce expert driving client revenue for software and digital products developers, high-tech product and computer manufacturers, and video game publishers.
 
Hence, the company is undertaking significant steps to broaden its payments portfolio, empowering merchants with more payment options and creating new opportunities for them to capture online market share internationally. 
 
To strengthen its portfolio, Digital River acquired LML Payment Systems Inc. for $3.45 per share or $108.2 million in September. 
 
LML Payment Systems offers financial payment solutions including credit card processing, online debit, electronic funds transfer, automated clearinghouse payment processing and authentication services to e-commerce and traditional businesses. 
 
The company also provides selected transactions to third-party processors and banks for authorization and settlement. 
 
Management believes that the acquisition will complement the company’s existing product portfolio and will enable Digital River to offer its online payment services to businesses of all sizes.
 
Meanwhile, for 2013, the company is likely to face some headwinds due to macroeconomic conditions, client attrition and additional necessary ramp up in investments to ensure an updated technology infrastructure.
 
Digital River forecasts that overall softness in the economy, especially in Europe coupled with recent decline in PC sales will make it challenging to post a growth in revenue. The company saw some client attrition in 2012 and expects the same in 2013 along with a decline in supporting business revenue. 
 
The market for online commerce solutions is highly competitive with bigwigs like Akamai Technologies, Inc. (AKAM - Analyst Report), Oracle Corporation (ORCL - Analyst Report) and Accenture Inc, (ACN - Analyst Report) to name a few. 
 
Hence, we maintain a Neutral recommendation on Digital River. Our recommendation is supported by a Zacks #3 Rank, which translates into a short-term rating of Hold. 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%