Analyst Rating, Deal, Market Listing All Lift Starbase Stock
Starbase Corp. (SBAS) shares jumped nearly 23% Wednesday after FAC/Equities analyst Damian Rinaldi initiated coverage of the tiny Santa Ana software firm with a positive research note.
Meanwhile, its chairman and chief executive, William Stow, said in an appearance on CNBC on Wednesday that the company’s cash position was “excellent” and could allow it to break even and become profitable “any time.” Day traders have been known to deal stocks based on expected television appearances by key managers.
Starbase, which makes software that manages organizations’ Web-application development efforts, was also named to the Russell 2000 small-cap index Monday evening, triggering index-fund buying in the shares. Then on Wednesday, the company announced an agreement with Bluestone Software Inc., a maker of Web software for wireless applications, to collaborate on technology development.
The confluence of events has served to lift the relatively unknown company’s profile among investors, said Rinaldi, who began coverage Wednesday with a strong buy rating. Before his report, only Kaufman Brothers LP analyst Peter Jacobson officially followed Starbase. Jacobson rates the stock at strong buy.
Starbase officials weren’t immediately available for comment.
The stock traded at $11.19, up $2.06, on volume of 2.7 million shares. Daily average turnover is 629,900. Starbase, which is 35% below its year high of $17.13 set Feb. 9, has a history of reacting with volatility following analysts’ comments. In December, the shares doubled in value in two days after Jacobson made bullish remarks.
“The company is small,” Rinaldi said. “But it’s an organization that has made some attempts to get to a higher level of value and a more visible market position. They’ve had to claw their way into respectability.”
Rinaldi set a 12-month price target of $23 on the stock. He expects revenue to total $32 million in fiscal 2001, up 83% from $17.5 million in fiscal 2000, which ended March 31. He expects Starbase to post a loss of 12 cents a share for the current year, compared with a 13-cent loss, excluding a charge, in the previous year. Rinaldi doesn’t expect the company to break even until the second quarter of 2002.
