[Briefing.com]
Allaire (ALLR) 17 -3 3/4: This Web application platform vendor blew through its 52-wk low of 20 7/8, hitting a low of 16 today. (chart) There's no news out on the company, however, our sources are telling us that the company canceled a one-on-one meeting with Needham. This could be interpreted positively or negatively as the idea is that important news will soon be forthcoming - good or bad. With the stock being down, perhaps investors are concerned it's an earnings warning. Particularly because it's close to the end of the quarter and it's a Friday - companies generally want to announce bad news late on a Friday afternoon to minimize the number of eyes and ears, but nobody can be sure...Today's reaction is a bit surprising as the company has been behaving as if everything is doing well. For example, a good sign is that the company's sales force has been beefed up considerably. The number of sales reps is expected to grow to 80 by year-end, up from 26 last year which indicates that the company is confident of strong top line growth. Also, the company's JRun application server has been exceeding expectations with over 44,000 units installed and over 72 partners have been trained....However, we have not been overly impressed with Allaire. While the company is posting fantastic growth numbers and is profitable, we are skeptical about the company being able to hold its competitive advantage and do not see it as a service that will dominate all other providers. However, its valuation is compelling as the company is trading at a forward price-to-sales ratio of roughly 2.4x and a forward p/e of 35x....Sell-side analysts love the stock - with some positive comments about the company's valuation coupled with its relatively small float of 17.7 mln shares, some strong comments (Dain Rauscher has already defended the stock, reiterating its Strong Buy rating) could move the stock higher quickly. Because the sell-off was so severe, we would be reluctant to buy the stock for at least a few days and see if some news comes out. |
