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Technology Stocks : CMGI What is the latest news on this stock?
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From: bob zagorin3/11/2007 9:11:00 PM
   of 19700
 
details on upgrade (seeking alpha)

CMGI Positive Analyst Coverage Was Only a Matter of Time

Ant & Sons submits: The first analyst upgrade for CMGI Inc. (CMGI) is cause for celebration and is indicative of a turnaround story that bears noting. The dot-com darling during the Internet craze that fell out of favor with the Street has now transformed itself into a supply chain/logistics management company generating over a billion dollars a year that deserves attention. With the company now beginning to achieve consistent profitability with a clear and realistic margin expansion runway ahead, CMGI warrants further investment attention, according to analysts over at W.R. Hambrecht.

Here is what analysts Robert Stimson and Jason Ko had to say in their joint report:

Our investment thesis in the software sector has always been to seek exposure to specific emerging sub-sectors or drivers of technology that we believe will transform the market. CMGI's ability to deliver operational efficiencies with its supply chain management solutions and services are particularly well-suited to the technology industry, as evidenced by its existing blue-chip customer base, and is a clear agent of 'transformational change' in our coverage universe. We are initiating coverage of CMGI with a Buy rating and establishing a price target of $2.50 (on the conservative side of their $2.47-$2.97 range suggested by their valuation models), or 57% upside from [Thursday's] closing price of $1.59.

The upgrade comes following the company's recent presentation at the Robert W. Baird & Co. 2007 Business Solutions Conference. Here is a glimpse of some brief notes we took during that conference call which provided for some of the bite behind some of the bullish comments made:

The presentation included highlights of a successful turnaround in 2006, with $16.6 million in cash flow from operations and a strong balance sheet with more than $225 million in cash. The company expects $1.10 billion in fiscal 2007 revenue and full year gross margin improvement. More specifically, the company is targeting 12-14% gross margin, 7% sales and administrative expenses and 5-7% operating margin as a percent of revenue in the coming year. This compares with 10.3% gross margin, 10.2% sales and administrative expenses and .05% operating margin as a percent of revenue in 2006. CMGI also expressed optimism in its ModusLink supply chain business, expecting double digit growth in the supply chain service provider market and indicating that it could gain a more significant market presence as eight direct competitors account for just 10% of the market.

The stock closed Friday higher by $.11, or 6.92%, to $1.70 on good volume of 14.66 million shares and should easily break through its 52-week high of $1.73 in the short term.
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