Rational rises on strong 3Q, new price target

Rational Software (Nasdaq: RATL) gained 7 percent Thursday after it reported strong quarterly results, and CS First Boston upped its target on the stock to $71 from $52.

Shares were up 3 5/16 to 54 7/8. The company reported Wednesday that net income for its third quarter was $25.4 million, or 27 cents per share, three pennies higher than First Call's consensus estimate.

Rational's strong position within the eBusiness and Internet development market -- which comprises 80 percent of total revenue -- is clearly driving the top-line acceleration, said analyst Wendell H. Laidley in a report. Laidley has a "strong buy" rating on the stock.

"We believe investors will increasingly recognize RATL as a leading provider of eBusiness infrastructure technology, warranting valuation comparable to other premier eBusiness enablers," Laidley wrote.

Rational's competitors include Inprise (Nasdaq: INPR), Mentor Graphics (Nasdaq: MENT), Progress Software (Nasdaq: PRGS), Oracle (Nasdaq: ORCL) Sun Microsystems (Nasdaq: SUNW), Sybase (Nasdaq: SYBS), Sterling Software (Nasdaq: SSW) and Wind River Systems (Nasdaq: WIND).