Talking Stocks: Beard
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May 15, 2000: 4:25 p.m. ET
WorldCom should rise a bit; Ariba and Razorfish have obstacles to overcome
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NEW YORK (CNNfn) - David Beard, portfolio manager at Morgens Waterfall Vintiadis, said Monday that WorldCom stock should rise above its current level, and that Ariba and other B2B stocks are overvalued and Razorfish stock will feel heat until investors are confident about its growth.
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Name: Karl, Colorado
Question: WorldCom (WCOM: Research, Estimates). I keep reading in the business newspapers that WorldCom has a strong outlook, and most of the Analysts rated the stock at "buy" or "strong buy." However, the stock continues on a downward trend. What is you opinion of WCOM (both short and long term) and the level at which WCOM should trade?
Answer: WCOM continues to trade between 40 and 50 because 40 percent of its revenues are from the competitive long distance market. Over the next 18 months I expect the stock to reach around $55 a share.
Name: Wen, United States
Question: Ariba (ARBA: Research, Estimates). It seems that B2B is heading down recently. What do you think of Ariba: Is it worthy for a long- term holding at the purchase price between 70 and 80?
Answer: B2B stocks are under pressure from their largest competitors to cut or eliminate fees from the market sites; thus most B2B companies should be valued as pure software companies. Historically, software companies have traded at 10 times revenues. Unfortunately this values most B2B stocks at half their current market value.
Name: Nguyen, California
Question: Razorfish (RAZF: Research, Estimates). What is the long and short on RAZF?
Answer: Razorfish and other Web service companies need to hire people to grow. In this difficult environment, investors are increasingly questioning their long-term growth rates, and hence the stocks should be coming under more pressure.
Name: Aaron, San Diego
Question: Global Star Communications (GSTRF: Research, Estimates). I owned 200 shares of GSTRF at 22/share back in December '99. It is now about 8, and I plan to get rid of it at a loss. Is it the right decision?
Answer: Yes, most of the satellite companies have had a great concept but poor execution and have used more money than initially planned.
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-- compiled by Staff Writer Mark Gongloff
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