Dow Jones Online News, Friday, May 07, 1999 at 21:09
NEW YORK -(Dow Jones)- PairGain Technologies Inc.'s shares advanced
Friday on positive comments from an SG Cowen & Co. analyst and on
lingering speculation that the company is a takeover target.
PairGain (PAIR) stock gained $2.125, or 17%, to settle at $15 on
volume of 10.6 million shares, more than four times the daily average of
2.2 million shares.
According to Preferred Capital Markets analyst James Stone, Cowen
reiterated its recommendation at the stock, saying it could climb as
high as $20. Stone said that price target is nearly 40 times SG Cowen's
fiscal 2000 earnings-per-share projections of 55 cents. Conrad Leifur,
an analyst with U.S. Bancorp Piper Jaffray, also attributed the gains to
Cowen's note.
While SG Cowen didn't provide a copy of the research note, its
analyst, Christopher Stix, said America Online Inc.'s (AOL) expanded
commitment to digital subscriber lines, or DSL, could mean added
business opportunities for Pairgain, which designs and makes DSL lines
and other digital telecommunications products. DSL and its variants use
the existing network of phone lines operated by the Baby Bells but
promise to offer transmission speeds many times faster than traditional
modems.
Meanwhile, Stone said Pairgain's shares could also be boosted by
further speculation that it is a takeover target. "These guys have been
shopped around to everybody," Stone said.
Pairgain released no news or said it knew of no reason for the
advance in its shares.
Last month, PairGain was the victim of an Internet message-board hoax
involving a false news story that said Pairgain was about to be
purchased by ECI Telecom Ltd. The bogus piece was published on a fake
Web page resembling a Bloomberg News Service site. The false report sent
Pairgain's shares soaring more than 30%, but most of those gains were
retraced after Pairgain, ECI Telecom and Bloomberg issued statements
denying the news.
Since that time, Bloomberg has filed a lawsuit and U.S. authorities
have filed criminal charges against a 25-year-old Pairgain employee
alleged to have been behind the stunt.
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