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Rare Medium sizzles on upgrades

Rare Medium Group (Nasdaq: RRRR) raced ahead 21 percent Monday after two brokerage firms said they had started research coverage of the stock.

Shares, up 10 1/2 to 60 1/2, have declined from recent highs after the company reported a wider-than-expected operating loss in its fourth quarter, losing $20.2 million, or 50 cents a share, on sales of $17.6 million.

Rare Medium provides services, consulting, and Web hosting to large and midsized corporations looking to develop their e-commerce businesses. It competes with companies such as Modem Media (Nasdaq: MMPT) and Organic (Nasdaq: OGNC), which also specialize in putting businesses online.

Credit Suisse First Boston said Monday it started Rare Medium with a strong buy rating and a 12-month price target of $80.

Investing in Rare Medium is like investing in the gateway of technology to the new economy, wrote Credit Suisse analysts Mark Wolfenberger and Barry Chubrik in a research report. They also said their research indicates that a significant alliance with a major software/hardware vendor may be in the works.

Credit Suisse said it expects the company to beat its first quarter revenue estimate of $19 million with better profitability than its earnings per share estimate of a 7 cent loss. The company is slated to report quarterly earnings on April 27.

Deutsche Banc Alex. Brown also started coverage of Rare Medium with a "buy" rating and a 12-month price target of $83. Further details were not immediately available.