Md. stocks top Dow with 36 percent return

January 18, 1998|By William Patalon III | William Patalon III,SUN STAFF

Last year was a great one for Maryland stocks.

Huge gains in the shares of companies such as Healthcare Financial Partners Inc. and Igen International Inc. helped power the index of Maryland's top public companies to a 36 percent total return for 1997, besting the Dow Jones industrial average and the Nasdaq composite.

The Dow generated a total return of 24.94 percent and the Nasdaq 31.3 percent.

Eight companies in the Bloomberg Maryland Index saw their shares return more than 100 percent for the year, while five companies lost 50 percent or more. The index was composed by Bloomberg exclusively for use by The Sun and is intended as a way to gauge the health of the state's public companies.

Healthcare Financial Partners was the big winner with a total return for the year of 175.8 percent. The Chevy Chase-based company, which went public in November 1996, provides financing for health care-related businesses and still has plenty of room to grow, insiders and analysts say.

In October, Chairman John Delaney said he believes his company could double its business over the next two years. "There is that kind of market opportunity," Delaney said.

This month, ABN Amro Chicago Corp. analyst Robert P. Napoli rated the company's shares a "buy" and said his 12-month price target was $43.

"They are a leader in a market niche which we believe is a major market niche that's very much underserved," Napoli said.

The stock, which hit a low of $9.75 and a high of $37.375 in 1997, ended the year at $35.50. It had gone public at $12.50.

Other Maryland-based companies whose stock returns eclipsed the century mark included Ciena Corp. (165.2 percent), Igen (165 percent), MedImmune Inc. (157 percent), Manugistics Group Inc. percent), Intersolve (113.2 percent), Davco Restaurants Inc. (113.8 percent) and Maryland Federal Bancorp (101.5 percent).

The biggest percentage losers: GSE Systems Inc. (67.6 percent), HCIA Inc. (66.3 percent) , Silver Diner Inc. (66 percent), Martek Bioscience (59.3 percent) and V-One Corp. (52.5 percent).

Shares of GSE Systems, the Columbia-based provider of software for energy and manufacturing industries, ranged between $3 and $11 during 1997. But when the year concluded, those shares had shed more than 67 percent of their value. One reason: Management did not hit hoped for revenue targets.

The second-biggest loser was Baltimore-based HCIA Inc., which builds computer systems for hospitals and other health care companies. Though its shares were as high as $43.50, they finished the year at $11.875. On one day in July, HCIA stock lost more than half its value after the company forecasted a second-quarter loss.

In November, however, Gruntal & Co. analyst Anthony V. Vendetti rated the company a "strong buy" and said this 12 month to 18 month price target was $18 per share.

The third-biggest loser was Silver Diner, which owns and operates 1950s-style restaurants in the Baltimore-Washington corridor, saw its shares end the year the year at $1.25, near their low of $1. They had peaked at $4.875 in January.

The company reported narrower losses of $1.38 million for its first three fiscal quarters ended Oct. 5. The chief reasons cited for the poor performance were lower sales at its restaurants in Northern Virginia and higher-than-expected start-up costs for several new locations.

On Dec. 18, Janney Montgomery Scott analyst Mitchell B. Pinheiro reiterated his "hold" rating on the shares.

The stock that was the second-biggest gainer to Healthcare Financial Partners was Ciena, a Linthicum-based company that makes equipment for long-distance telephone networks. It went public in February at $23 per share and closed 1997 at $61.125. In third place was Igen, Gaithersburg-based maker of diagnostic equipment for the medical industry. Its stock returned 165 percent, closing the year at $13.25. Its low for the year was $4.75.

It was followed by MedImmune, a Gaithersburg bio-technology firm, whose shares returned 152.21 percent, finishing out 1997 just below its high for the year of $43.50.

On Dec. 12, Jay B. Silverman, an analyst at BancAmerica Robertson Stephens reiterated his "buy" rating on MedImmune shares.

Behind MedImmune was Manugistics Group, which produces software designed to help managers with the logistics of running a business. Shares in the Rockville company pumped out a 124.53 percent total return last year. Manugistics stock drew down the curtain for 1997 at $44.625 and actually traded up to nearly $50 thanks to landing big contracts with Staples Inc., Hershey Foods Corp. and Deere & Co. -- as well as a mystery Japanese firm that Manugistics managers cagily declined to name.

In a talk with reporters in mid-December, Manugistics Group Chairman William Gibson said he sees no slowdown in demand for his company's software. In fact, he believes a slowing economy could boost demand from companies looking to cut costs by working smarter.

"When the economy tends to tighten, folks look at the budget and say: 'How can we effectively improve our performance?' " Gibson said at the time.

Manugistics also has tightened relationships with such heavyweight partners as SAP AG, Oracle Corp. and KPMG Peat Marwick.

Pub Date: 1/18/98

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