ICT Group Diversifies to Keep StrongAs the stock prices of many customer relationship management firms have dipped with the falling market, ICT Group has steadily increased over the past month to its March 27 closing price of $10, less than $3 shy of its 52-week high of $12.19 set in September.
"CRM is a difficult sector and a tough market, but these guys have historically performed well," said Jeffrey Baker, senior analyst at Craig Hallum Capital Group Inc., Minneapolis. "They have a broad and diverse client base, avoiding exposure to any individual sector." Baker offers a buy recommendation on ICT Group stock.
The 18-year-old CRM provider focuses 50 percent of its business on outbound telesales, 45 percent on inbound telesales and 5 percent on database marketing and market research. It provides CRM services to an equal mix of insurance companies, financial services firms and information-technology and telecommunications companies.
A growing 10 percent portion of ITC Group's business is focused on healthcare. It signed a three-year deal last month with pharmaceutical company Pfizer Inc. to provide CRM services as part of an effort by Pfizer to expand its focus in the healthcare sector.
"We are pursuing the pharmaceutical industry, because right now investment in research and development is slowing while investment in the marketing side is growing for these companies," said John Brennan, chairman/CEO of ICT Group, Langhorne, PA. "There is a lot of opportunity in the healthcare arena because the competition has not yet begun to target this area."
In the second quarter of 2001, ICT Group will launch a CRM service labeled Direct Response Medical Detailing. It combines telesales and database marketing and is designed to help pharmaceutical companies get doctors to subscribe to their product. Through database research, ICT Group will try to determine which doctors will be responsive to specific direct marketing campaigns, Brennan said.
To further diversify its client base, ICT Group is expanding its focus on automobile insurance providers.
"In the last 24 months, insurance companies such as Prudential, Progressive and Allstate have shifted to phone-based sales," Brennan said. Prudential is one of the company's national auto insurance clients.
The company also is increasing its business in the United Kingdom, Ireland, Australia, Canada and Latin America, which represented $17 million of its roughly $57.8 million in revenue for the fiscal fourth quarter ending Dec. 31, 2000, up 129 percent from the same quarter for the year prior.
"We are expanding internationally because there is less competition overseas in these untapped markets," Brennan said. The company was in "investment mode" abroad before 2000, the first year it achieved profitability internationally, he said. The company looks to expand soon in Eurasia, continental Europe and Latin America.
During the next three years, the company hopes to expand its in-sourced CRM services, labeled iCT Connected Touch. This enables companies to "rent" CRM software and technology and use their own employees to manage CRM initiatives.
"In 2000, over 80 percent of all contact center activity was in-sourced," Brennan said. By the end of last year, ICT Group had installed its in-sourced system with roughly five clients having up to 50 call center seats each.
ICT Group anticipates that net revenue in 2001 will reach $250 million to $260 million compared with the roughly $199 million achieved in 2000.