Gateway (NYSE: GTW) rose 19 percent Friday after reporting a strong third quarter. While most analysts were impressed, U.S. Bancorp Piper Jaffray's Ashok Kumar lowered his price target.
Shares were up 7.12 to 50.75 following the company's Thursday night report, in which it met the Street's expectation of a profit of 46 cents a share. Competitor Dell (Nasdaq: DELL) was up 1.5 to 24.68 and Compaq (NYSE: CPQ) was up 2.16 to 24.69.
Gateway was reiterated a "buy" by analyst David Bailey at Gerard Klauer Mattison & Co, who maintained a 12-month target price of $80 a share.
Analyst Robert Cihra at ING Barings US reiterated "strong buy" rating and has a price target range of $60 to $80 per share.
Ashok Kumar of U.S. Bancorp Piper Jaffray, known for opinions which often run contrary to the Street's, lowered his price target on the stock to $56 from $85 Friday.
In a research note, Kumar said the company's commercial sales remain the only opportunity to resuscitate revenue growth, and cautioned that channel loading by Compaq and Hewlett-Packard (NYSE: HWP) could ignite price wars in the retail segment in the December quarter.
Calendar 2000 is expected to be "a tough environment for PC OEMs (original equipment manufacturers) and Gateway's BTB strategy is not compelling enough to get excited about the story," Kumar wrote. "Moreover the current environment will limit upside valuation for PC stocks," he added.