Interwoven gains on "strong buy"

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Interwoven shot up 20 percent Thursday after an analyst initiated coverage of the stock with a "strong buy" and slapped a $32 price target on the stock.

Shares in the provider of content management software were up $4 to $24.06. The company's flagship TeamSite software is an application used for developing and maintaining large Web sites.

Prudential Securities analyst Tim Getz called the company a dominant player in the content management market, and said it was well insulated from the economic downturn. The market for Web content management is projected to reach $3.9 billion in 2004 from $430 million in 2000, and Interwoven is well-positioned for long-term growth, he added.

Interwoven (Nasdaq: IWOV) "has felt very minimal effects from the current economic slowdown as content management remains a key IT spending priority for many businesses," Getz wrote in a research note.

Getz also gave estimates for strong growth. He expects revenue to grow by 109 percent in 2001, and 50 percent in 2002. Getz added that estimates are "conservative and could increase over time."

The stock trades at a more expensive multiple than competitors--at 66.1 times Getz's 2002 earnings estimates versus its peers' average of 49.7 times estimates. But Vignette (Nasdaq: VIGN) and Documentum (Nasdaq: DCTM) trade at 100 times and 61.2 times 2001 earnings, respectively. Besides, the stock "deserves a market premium given its leadership position in a relatively unpenetrated market," Getz said.

Four other analysts rate the stock a "strong buy," and 7 others rate it a "moderate buy" according to Zack's Investment Research.