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VA Linux gains on analyst praise

VA Linux (Nasdaq: LNUX) rose 18 percent Thursday as analysts praised its fourth quarter results.

Shares in the company, which offers open source Linux systems and services rose 6 3/4 to 43 7/8, or 18 percent.

The company delivered on exactly what it said it would do in its fourth quarter -- it boosted margins, posted big revenue growth and diversified its revenue base. VA Linux lost $4 million, or 10 cents a share, on sales of $50.7 million.

A report from WR Hambrecht upgraded the stock to a "strong buy" and said the company should reach profitability by the end of calendar year of 2001. The report also revised revenue estimates for 2001 to $301.6 million from a previous $241.1 million.

"We believe that the current valuation of VA Linux systems does not reflect the company's solid progress and renewed positive outlook," analyst Prakesh Patel wrote in the report, which placed a 52-week price target of $60 on the stock.

Credit Suisse First Boston reiterated its "buy" rating on the company and set a share price target of $65. Analyst Amit Chopra raised his 2001 revenue forecast from $271 million to $323 million, changing the EPS estimate from a loss of 44 cents a share to a loss of 26 cents a share.