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Manugistics slides despite solid earnings

The maker of supply-chain management software falls more than 9 percent even though it met analysts' estimates and confirmed its outlook for fiscal 2002.

    Manugistics ended down more than 9 percent Tuesday even though it met analysts' estimates in its fourth quarter and reiterated its guidance for the first quarter and fiscal 2002.

    The stock closed the regular session Tuesday down $2.42 to $23.56 on the Nasdaq.

    In the fourth quarter, the maker of supply-chain management software pocketed $3.7 million, or 5 cents a share, on sales of $89.3 million.

    First Call consensus expected the company to earn 5 cents a share on sales of $81.3 million.

    The $89.3 million in sales represents a 105 percent improvement from the year-ago quarter when Manugistics lost $1.2 million, or 2 cents a share, on sales of $43.6 million.

    For the fiscal year, Manugistics pocketed $8 million, or 12 cents a share, on sales of $268 million, up 76 percent from fiscal 2000 when it lost $8.3 million, or 15 cents a share, on sales of $152.4 million.

    Manugistics executives told analysts to expect first-quarter and fiscal 2002 sales and earnings to be in-line with current estimates.

    SG Cowen Securities analyst Pawan Malhorta reiterated his "buy" recommendation and 12-month price target of $28 a share Tuesday, saying the company's diversified customer base will serve it well though this current slowdown in information-technology spending.

    "Over the past two years, Manugistics has completely overhauled the management team and has returned to operating profitability," he wrote in a research note. "Given Manugistics' strong fundamentals and position as the second-largest pure-play supply-chain application vendor, we expect it to continue to trade at a premium to the group."

    Epoch Partners analyst Mark Verbeck upgraded Manugistics from a "new" rating to "affirm" while Deutsche Banc Alex Brown analyst Christopher Mortenson reiterated his "strong buy" rating despite the stock's relatively high valuation.

    "While the stock is not inexpensive on a relative basis, we believe investors will pay a premium for companies that can deliver in a tough environment," he wrote in a research note.

    Robinson-Humphrey's Christopher Rowen rates the stock a "buy" and advises long-term investors to begin accumulating Manugistics shares.

    "We believe Manugistics shares will significantly outperform the market over the next three to six months," he wrote in a research note. "However, we believe the key question on investors' minds is whether to buy shares now versus waiting for the April reporting season to pass."

    First Call consensus expects the Rockville, Md.-based company to earn 3 cents a share on sales of $86.4 million in the first quarter and 26 cents a share on sales of $397.2 million in the fiscal year.

    After racing up to a 52-week high of $66.06 in November, Manugistics shares fell to a low of $11.25 in June.

    Twenty of the 23 analysts tracking the stock rate it either a "buy" or a "strong buy."