Sector Snap: Software shares climb

posted: 44 DAYS 18 HOURS AGO

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NEW YORK -Businesses that have kept a tight lid on information-technology spending during the recession are finally starting to loosen up, a Jefferies & Co. report said Monday, pushing up shares of corporate-software makers such as VMware Inc. and Citrix Systems Inc.

"Increased confidence seems to be leading to an accelerating rate of corporate IT spending," Jefferies analyst Katherine Egbert told investors in a note.

She raised her ratings on VMware and Citrix to "Hold" from "Underperform," and Symantec Corp. to "Buy" from "Hold."

She expressed some caution on VMware, a virtualization-software maker based in Palo Alto, Calif., and Citrix, a Fort Lauderdale, Fla., company that provides technology for streamlining computer systems, because their shares are already up sharply. Both have doubled since the beginning of the year.

Egbert raised the price target for VMware to $40 from $30. She raised Citrix to $40 from $32.

Both stocks gained Monday, with VMware up $1.47, or 3.5 percent, to $43.86 in afternoon trading, and Citrix up $1, or 2.4 percent, to $42.75.

Symantec Corp., a network-security software provider based in Cupertino, Calif., fell 14 cents to $16.49. The company said separately on Monday that it will end its outsourcing agreement with Digital River Inc. when the contract expires in June. Instead of outsourcing e-commerce functions to Digital River, it will use its own in-house technology for selling products online. Shares of Digital River continued to dive and recently changed hands at $26.74, down 34 percent, or $13.68.

Egbert reiterated "Buy" ratings on software makers Microsoft Corp., based in Redmond, Wash., and Germany's SAP AG. She lifted Microsoft's price target by $1, to $30 and SAP's to $59 per American depositary share from $51 ADP.

Microsoft gained 14 cents to $25.69 and SAP rose 33 cents to $51.26.

2009-10-12 15:33:13