9 Feb 16:55
By Marcelo Prince
NEW YORK (Dow Jones)--Legato Systems Inc.'s (LGTO) foundering shares showed
some zip for the second-straight session, recouping some of the losses that
wiped out two-thirds of its market capitalization in previous weeks.
The initial impetus behind the stock's rise appeared to be positive comments
made by Nancy Tengler, president of Global Alliance Value Investors, on
financial news network CNBC's "Squawk Box" program early Wednesday. The value
money manager told viewers that she thinks Legato's share price looks cheap
relative to its sales levels.
And some investors took her word. Legato climbed 5 1/4, or 17%, to end
Wednesday's session at 36 1/16 on 9.8 million shares - triple average volume.
After sinking to 24 3/8 on Jan. 31, the stock has gained 47% but remains well
shy of its 52-week high of 82 1/2.
Several analysts said they weren't aware of any fundamental news that
justified the stock's spike Wednesday, attributing the gains to bargain hunters.
"The valuation was attractive," explained Paul Dravis, analyst at Banc Of
America Securities.
But Hoak Breedlove Wesneski analyst Joseph Payne pointed out that executives
from the storage-management software maker gave presentations at two recent
investor conferences that might have opened some eyes. Legato officials spoke at
last week's Banc of America conference and at a Salomon Smith Barney conference
Tuesday, he said.
"People are starting to figure this company still wins business" and its
accounting misstep was about deferring revenue recognition, not "debooking"
revenue, Payne said.
On Jan. 19, Legato posted fourth-quarter revenue and earnings short of
estimates and said it was adopting a more conservative method for recording some
revenue. Analysts were quick to downgrade their ratings and the shares fell 45%
the following session. Legato didn't return calls seeking comment. |
