Software developer Legato Systems Inc. (Nasdaq: LGTO) shot up 3 9/16, or 6 percent, to 66 1/2 Thursday after BancBoston Robertson Stephens reiterated its "strong buy" recommendation on the stock.
Networking software analysts John Powers and Mark Fernandes said its recent deal with Hewlett-Packard Co. (NYSE: HWP) should pay big dividends in the second half of 1999 and 2000.
"We are reiterating our "strong buy" rating on Legato, following the company's announcement that it has signed an agreement with Hewlett-Packard to supply HP with its Storage Area Network solution," the analysts said in a research not.
"We expect the HP partnership to result in additional revenues of approximately $1 million in fourth-quarter 1999 and between $7 million and $10 million in fiscal 2000. In addition, we believe Legato's current stock price represents a tremendous investment opportunity."
First Call consensus expects Legato to earn 25 cents a share in its second quarter and $1.12 a share in its fiscal year.
Last quarter, it made $10.1 million, or 19 cents a share, on sales of $48.3 million.
The stock surged to a 52-week high of 67 3/4 in January after falling to a low of 27 1/2 in October.
Sixteen of the 17 analysts following the stock maintain either a "buy" or "strong buy" recommendation.