StarBase Shares Nearly Double Amid Analysts’ Strong Ratings
StarBase Corp. shares nearly doubled over the last two trading sessions after the Santa Ana-based maker of software tools for building Web sites received bullish recommendations from two analysts.
The stock hit a record $15.13 a share during heavy trading Monday before retreating to close at $10.75 a share, up 25 cents, in heavy trading on the Nasdaq market. About 22 million shares changed hands, making StarBase the ninth most active stock in U.S. markets. The volume was more than 12 times higher than the daily average over the last three months.
The shares have risen 89% since closing at $5.69 on Thursday.
On Friday, analyst Peter Jacobson at Kaufman Bros. rated StarBase a “strong buy” in new coverage. Donner Corp. International on Monday upgraded its rating to a “buy” from “speculative buy,” saying the shares are undervalued.
“Momentum is picking up dramatically” in direct sales to customers, said William Stow, StarBase chairman and chief executive. Sales to hardware makers will get a boost when pending negotiations close by the March quarter at the latest, he said.
StarBase will lose 3 cents a share for the fiscal third quarter ending Dec. 31, according to Jacobson.
The projected loss for the current quarter “seems like a reasonable number,” Stow said.
StarBase is benefiting from increased visibility, Jacobson said.
“We believe the stock is undervalued,” he said. “The company has been performing well, and the prospects are outstanding.”
StarBase has been a troubled company for several years, recording annual net losses every year since 1994. During that period, the company has lost a total of nearly $7 million on revenue of $23.2 million.
“They do have issues in their past that they’ve had to work through, and consequently they did have to change strategies a couple of times and raise money,” said Jacobson, who does not expect the company to post an annual profit until 2001.
At Monday’s closing price, the company, which has about 100 employees, had a market capitalization of more than $350 million.
StarBase also is benefiting from enthusiasm for the free Linux computer operating system that competes with Microsoft Corp.’s Windows and is being commercialized by a growing number of companies, Jacobson said.
StarBase owns about 47% of OpenAvenue, a Web site for so-called open source developers who work on computer code that’s freely available over the Web, such as Linux.
StarBase’s recent sale of product licenses to 3dfx Interactive Inc., one of the biggest makers of computer-graphics chips, also was cited as a reason for the upgrade.
