NetSuite Surge Sparks Valuation Debate
By Ivy Lessner
TheStreet.com
SAN FRANCISCO - Mania can sometimes be mistaken for optimism. The question is whether NetSuite (N - Cramer’s Take - Stockpickr) investors Friday are optimistic or just addled.
Amid heightened publicity following its Wednesday IPO, investors poured into the stock late Thursday, and continued the buying spree Friday, driving the price up nearly 30% to $45.98.
That gives a stock deemed fairly priced at $26 a two-day gain of nearly 77%.
San Mateo, Calif.-based NetSuite sells on-demand business software on a subscription model that Salesforce.com (CRM - Cramer’s Take - Stockpickr - Rating) has proven can succeed. Although still losing money, NetSuite is expected to generate a small profit in 2008. Salesforce is expected to have just over $1 billion in revenue and produce EPS, excluding items, of 32 cents in the coming fiscal year.
“I’m OK with the coming-out price at $26,” Mark Schappel, analyst with Benchmark, said Friday. “I have a hard time valuing this thing higher than Salesforce.com,” he added. He estimates NetSuite will have revenue of $158.5 million and EPS of 13 cents in 2008.
Benchmark does not make a market in NetSuite, nor is the company an investment banking client. It is the first sell-side analyst firm to weigh in on the stock to date.
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February 2nd, 2008 at 1:07 am
Jack…
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March 12th, 2008 at 4:15 pm
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