PurchasePro (Nasdaq: PPRO) and Gateway (NYSE: GTW) announced a strategic alliance Monday that earned it some analyst support.
But shares in the business-to-business company that has had trouble breaking away from the pack of players such as Ariba (Nasdaq: ARBA), Commerce One (Nasdaq: CMRC) and VerticalNet (Nasdaq: VERT), were down 0.38 to 87.5. The stock has been gaining momentum as Purchasepro rolls out a high-profile partnership with America Online and continues to deliver strong revenue growth.
The companies will develop three global marketplaces that allow clients to buy and sell products and services online. The companies will also launch a worldwide customer trading initiative, which will include an e-marketplace education program.
In addition, Gateway has licensed three digital marketplaces from PurchasePro, for which it will pay licensing, hosting and maintenance fees. The companies will split recurring subscription, advertising and transaction fees.
Gateway will also put an icon on millions of boxes it ships to small to medium size business which will take end users directly to the marketplaces.
PurchasePro should drive significant growth in the near term through major channel partnerships, according to a Monday report from Lehman Brothers. The report reiterated a "buy" rating and $120 price target on the stock, based on the alliance.
Analyst Patrick Walravens said the Gateway deal will work to PurchasePro's benefit in three ways; as Gateway uses its hundreds of Country Stores to train as many as 70,000 companies per year to use digital marketplaces, this should help PPRO address the number one challenge in B2B: driving usage of marketplaces.