SCO Group Shares Jump on Analyst's Upbeat Comments
biz.yahoo.com
Wednesday October 15, 4:02 pm ET
By Marcelo Prince
NEW YORK -- The volatile shares of SCO Group Inc. (NasdaqSC:SCOX - News) jumped as much as 39% Wednesday after a brokerage analyst recommended the stock and set a price target nearly triple its closing price Tuesday.
Brian Skiba, software analyst at Deutsche Bank Securities, started coverage on SCO Group with a buy rating and a $45 price target. He said the Lindon, Utah, company is "a call option on a substantial lawsuit against IBM and the potential to capitalize on Linux."
SCO Group made headlines when its sued International Business Machines Corp. (NYSE:IBM - News) in March claiming IBM had transferred some of its intellectual property into the popular Linux operating system. IBM denied the claims and filed a countersuit. SCO is also trying to collect royalties from Linux users.
"The IBM lawsuit and the potential for Linux licensing deals offer plenty to be excited about, while failure would render the shares worthless, in our view," Mr. Skiba wrote in a research note.
Mr. Skiba said he isn't attempting to predict the outcome of the legal case and doesn't know whether SCO Group's claims have merit. He warned the "risks are numerous and the shares should be considered speculative."
Around 3:30 p.m. EDT on the Nasdaq Stock Market (News - Websites) , shares of SCO were up $4.87, or 31%, at $20.40. Earlier Wednesday, SCO hit a two-year high of $21.57. The stock began the year at $1.45.
Mr. Skiba doesn't own shares of SCO. Deutsche Bank may seek to provide investment banking services to the company.
-By Marcelo Prince, Dow Jones Newswires; 201-938-5244; marcelo.prince@dowjones.com |
