Chris Vroom, an analyst with Credit Suisse First Boston, highlighted recent rulings by the European Union and U.S. Federal Trade Commission that favor the use of business-to-business online exchanges. His report also noted the increasing adoption of online exchange technology and the business-to-business sector's recurring high-margin profits.
Ariba, which Vroom characterized as "knocking the cover off the ball," jumped $7.50, or nearly 6 percent, to close at $142.50 today.
Ariba's "current momentum remains outstanding," Vroom wrote in his report.
Vroom noted that his sources have indicated Ariba's backlog for license fee revenue and deferred revenues may reach $250 million in the fourth quarter, compared with $122.6 million in the previous quarter.
He added that Ariba's backlog has "substantial upside to our low-ball fourth-quarter forecast of $96 million."
Last month, Ariba reported fiscal third-quarter results that blew past analysts' revenue and earnings estimates and set the stage for a possible comeback in B2B stocks. For its third quarter, Ariba reported total revenues of $80.7 million. That was up 578 percent from the same quarter last year and up 101 percent from the previous quarter. Wall Street had expected the company to report revenues of $50 million to $55 million.
Ariba shares have risen nearly 38 percent since the company posted its third-quarter results July 12.
Other business e-commerce players jumped as much as 36 percent as they rode Ariba's coattails in the week following its earnings report. But most of them have since shed those gains.
Still, Vroom's report helped give those stocks a slight push today.
Although the tech-heavy Nasdaq was down 14.44 to 3,848.55, FreeMarkets rose $2.19, or about 4 percent, to $55.37. Meanwhile, PurchasePro.com climbed $1.33, or about 3 percent, to $40.27.
Commerce One, once a high-flying IPO, and VerticalNet, ended the day up about 1 percent at $51.25 and $44.87, respectively.
Business-to-business stocks are again showing signs of life, after having taken a beating in the market downturn in the spring. Business e-commerce stocks were, in part, swept up in the negative sentiment toward dot-coms and e-commerce that took hold of the markets.
Vroom now repudiates such thinking.
"We are very bullish on the B2B sector as broadening adoption supports continued strong fundamental momentum," he wrote. "The September-October launch of several industry marketplaces validates the exchange approach."