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Analyst reports: Exodus wows Wall Street

Meetings between the Web hosting service and analysts pay off as several positive reports on the company are published, reiterating bullish stances and increasing quarterly targets.

Exodus Communications knows how to woo Wall Street.

Executives from the Santa Clara, Calif.-based company, which provides high-end Web hosting services for 3,700 customers around the world, met with analysts on Friday at the Pierre Hotel in New York to discuss business strategies and upcoming financial expectations.

On Monday, the meetings paid off as several positive reports were published, reiterating bullish stances and increasing quarterly targets in the wake of the annual conference.

"We believe Exodus is poised to exploit the burgeoning market for dedicated hosting and value-added services," Jeffries analysts Frederick Moran and Jeffrey Cino wrote in a research note. They rate Exodus a "buy" with a 12-month target price of $65 per share--more than double their current price.

Other analysts were even more bullish about the company's stock prospects.

Cynthia Houlton at Dain Rauscher Wessels reiterated her "strong buy" rating and 12-month target price of $70 per share. Michael Bowen at Deutsche Banc Alex Brown maintained a "strong buy" rating and a 12-month target price of $117.

But the analyst reports were not categorically favorable. Several analysts said they were concerned about the slowdown in business from Internet start-ups, which have recently been forced to curtail spending on everything from consulting services to advertising.

Exodus stock slipped almost 10 percent by market close on Monday to $27.69. The stock, which has traded in a 52-week range of $19.89 to $89.81, has dropped 17 percent since the beginning of November and 37 percent since the beginning of the year.

Stephen Murphy at CIBC World Markets reiterated his ''buy'' rating but slashed his 12-month target price to $50 from $87 per share. William B. Klein at Wasserstein Perella Securities maintained a "buy" rating and the relatively tepid 12-month target price of $50 per share.

"Exodus is by no means insisting complete immunity to the dot-com upheaval but has thus far not really shown any pain publicly (or in financial disclosures) on the issue," Salomon Smith Barney analysts Stephen Mahedy and Dan Cummins wrote in a research report Monday.

"For the past two quarters, management has indicated that rigorous upfront customer screening and unyielding pay-in-advance policies have insulated its financial results. Still, we remain open to the possibility that some negative news on dot-com exposure could eventually emerge from Exodus," the Salomon analysts wrote.