A Wall Street observer whose opinion I respect said the other day he has felt the market would hit a bottom when shares of Juniper Networks reached $30.
If that’s the case, we moved further away from those eagerly anticipated depths on Tuesday as JNPR jumped $8.94, or 18.0%, to $58.63. The high-speed router maker was the top gainer among members of internet.com’s Internet Stock Index on a day when 40 of the ISDEX’s 50 stocks posted advances.
While I’m all for getting this bottom thing over with, Tuesday’s strong performance was a welcome relief from the relentless pounding tech stocks, and ‘Net tickers in particular, have sustained in recent days.
Unfortunately, the rally likely won’t last long, since there’s nothing behind it other than a partial bounceback. I hope I’m wrong, but Juniper is a good example. Even with Tuesday’s impressive rise, JNPR shares still finished trading below last Thursday’s closing price of $61.75. Not only that, Juniper’s gain came a day after a Salomon Smith Barney analyst cut JNPR’s 12- to 18-month price target in half, from $200 to $100 per share. That’s not exactly rocket fuel.
Avici Systems , another router vendor and competitor to Juniper and Cisco Systems, provides an even more dramatic example. AVCI shares soared 35.2% on Tuesday, but that only got the stock back to last Friday’s closing price of $13.94.
Avici was slammed by the market on Monday after a Merrill Lynch analyst started coverage with an intermediate “neutral” and long-term “accumulate” rating, citing the company’s low number of customers, relatively new technology and stiff competition in the router sector.
Part of Avici’s Tuesday rebound may be due to the company sticking by its fiscal 2001 revenue forecast of $85 million to $90 million.
Then there is supply-chain management systems provider ePlus , which zoomed up 25.4% to finish at $9.25 on Tuesday. Sounds great, but PLUS was coming off Monday’s 52-week closing low of $7.38. For the year, ePlus is down 18.7%.
There was at least one Internet stock that enjoyed a genuine catalyst-driven rise on Tuesday. Varsity Group , a provider of outsourced textbook procurement software for educational institutions, gained 28.6% after reporting dramatically lower losses in the fourth quarter. VSTY’s net loss in Q4 was $1.1 million, compared to 1999’s Q4 loss of $12.4 million. Still, the increase only got VSTY to 28 cents per share.
