Net stocks continue holiday surge
Net stocks push higher again as investors continue to speculate that Net firms will get a revenue boost from holiday sales.
Online retailers Egghead.com and Cyberian Outpost and Net auctioneer Onsale blasted higher and were among the most-actively traded stocks on the Nasdaq market.
Even Open Market, which markets software for building Internet storefronts, shot up for the first time since it laid off about 15 percent of its work force last month. Open Market closed at 12.4375, up 82.57 percent on the day.
Rival Broadvision gained 4.625 to close at 27.25 today, two days after Adams Harkness & Hill initiated coverage with an "attractive" rating. NetGravity, which sells ad server software, rose 14.52 percent to close at 22.1875.
Onsale soared 36.75 percent to 60, nearly 10 points above its pervious high. Egghead.com, which recently began a major ad campaign, climbed 17.47 percent to 21.4375 on heavy volume, while Cyberian Outpost climbed 12.21 percent with 4.2 million shares traded. eBay, another auction site that has been an investor darling since it went public in September, gained 3.91 percent to close at 204.50.
But the boom in e-commerce stocks has its skeptics.
"There aren't enough consumers on the planet to buy enough products to justify the stock moves,'' Rick Berry, analyst at Atlanta's J.P. Turner & Company told Bloomberg. "Yet investors keep buying these Internet stocks.''
Earlier this week, Cyberian Outpost, music store CDnow and several other online retailers unveiled an umbrella Web site called ShopperConnection, which links the retailers together. Cyberian Outpost shares have almost tripled since Friday's close.
The market has risen nearly 25 percent in the past six weeks, while outlooks for corporate profits don't not support the rise, analysts said.
"Without much economic news to pay attention to, the market will pay attention to some of the high valuations," said Peter Cardillo, director of research at Westfalia Investments said this morning. "It will be a day of reflection."
Some strong gainers include America Online, which yesterday moved to acquire Netscape Communications for $4.2 billion. AOL stock climbed higher today, also helped by an upgrade by an influential investment banking firm.
Lehman Brothers said today that analyst Brian Oakes had raised his price target on AOL to $110 per share from $75 while maintaining the stock as a "buy." The stock inched up 0.8125 to close at 92.1875 in active trading on the New York Stock Exchange.
"Given the strength in AOL's current business and limited financial risk in the deal, we feel comfortable raising our target price to $110 even though we realize valuation is being stretched--but this is the Internet and AOL is the dominant company," wrote Oakes in his report.
Netscape dropped 0.4375 to close at 39.4375.
At Home shares fell 0.125 to close at 64.9375 after rising as much as 40 percent since November 16 on investor optimism that the cable-based high-speed Internet provider will become a major player. At Home stock is up 160 percent so far this year.
"The stock's been wild because of the Internet craze,'' said Paul Foster, a trader at 1010 Wall Street., a Chicago options-strategy firm. "Now there's additional competitors that AOL has to deal with."
Sun Microsystems also closed higher at 75.75, up 3.86 percent, after Merrill Lynch boosted its 12-month share price target on Sun to $86 from $80 following yesterday's announcement that Sun will supply AOL with equipment and services.
Merrill analyst Steve Milunovich, however, maintained his "long-term buy" rating on Sun.
Novell was another tech firm to get a boost from a rating upgrade. After the network software provider reported stronger-than-expected earnings yesterday, Goldman Sachs today upgraded it to "market outperform" from "market perform." Shares of Novell rose 4.32 or 0.75 to 18.125. 4.32 percent in heavy trading.
Other tech issues did not perform so well. Shares of Intuit fell 1.375 to 58.50 after yesterday's news that the company's first-quarter loss widened. The company reported earnings yesterday after the close of regular U.S. trading.
Reuters and Bloomberg contributed to this report.