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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: John Madarasz who wrote (111827)	8/15/2000 12:25:32 AM
From: puborectalis	Respond to of 120523

Trader's Edge: VerticalNet 09-Aug-00 08:00 ET Editor's Note: This commentary was posted live on Briefing.com's subscription site on August 9. If you want access to commentaries such as this as soon as they are posted, you need Briefing.com's subscription service -- take a Free Trial today! Briefing.com highlighted VerticalNet (VERT) in a Trader's Edge column less than a month ago (July 12). On July 18 we decided to take profits in the stock following a 54% surge in price over the course of four trading sessions, believing that near-term upside was extremely limited based on an overextended condition in the stock. However, after a 35% vertical retracement back to the $40 area, VERT shares again appear poised for another rally attempt. Trading Points First the reasons for our cautionary comments on July 18.... The surge in price put VerticalNet in the position of having to test key resistance with no intermediate-term support levels which to regroup should the move have failed. The stock was also running low on catalysts. Extremely upbeat preview of the company's Q2 earnings release contributed significantly to the stock's surge in price and, in our opinion, left the issue exposed to a sell-the-news reaction to the actual report. Over the nine trading sessions since VerticalNet released its numbers, the stock has fallen 21%, although top- and bottom-line results were above expectations.... Q2 revenues came in at $53.6 mln, a 95% improvement over the year-ago period. Net loss for the quarter was $0.23 a share, 7 cents narrower than Wall Street views. While numbers were strong across all lines, growth at company's NECX.com unit was not quite as robust as many investors would have liked. The possibility of thinning margins is forcing Wall Street to temper expectations for the remainder of the year. Long term, the story of VerticalNet evolving into a major force in the B2B exchange community is still intact. Also, company continues to make progress in its transition from an advertising-driven model. In Q2, VERT was able to further reduce its reliance on advertising revenues to 38% of the top-line mix from the Q1 level of almost 47%. Just as the stock's 54% vertical advance following the July 12 write-up made us wary of its prospects for further appreciation, the magnitude and speed of the retracement raises questions of wether the stock is now oversold. VerticalNet (VERT 44 7/8) shares have bounced 12% since successfully testing support in the $40 area... Given that the VERT has a history of being a late participant in tech moves and B2B sector rallies, we would allow the market to dictate our trading of the stock.... Key near-term resistance level is $45 11/16. A retreat through the $39-40 level would produce a sell signal.