Rockville firm's shares rise $15 Manugistics stock is up 40% to new high as profits beat forecasts

Inventory software is a hit


March 28, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Manugistics Group Inc. shares jumped 40 percent yesterday to a record high after the software company's fourth-quarter earnings topped expectations on sales that almost doubled.

Shares of the Rockville company rose $15.1875 to $53.1875 in trading of 9.27 million, almost 19 times its three-month daily average.

"To have that kind of strength on that kind of volume is an expression of a lot of confidence by the street," said Douglas J. Crook, a Prudential Securities analyst in San Francisco.

Manugistics sells software and services that help companies manage inventories -- critical for retailers and computer manufacturers, who are trying to cut the time it takes to move products to store shelves. That demand helped Manugistics sales surge, ringing up a record 16 contracts worth least $1 million each, analysts said.

In a report released after the market closed Thursday, Manugistics said its profit before a charge rose to $6.69 million, or 25 cents a diluted share, in the quarter ended Feb. 28, from $3.53 million, or 15 cents, in the same period a year ago. That beat the average estimate of 22 cents a share by analysts polled by IBES International Inc.

Revenue jumped 94 percent to $62.1 million from $32 million. A charge of $47.3 million for acquiring research and development from closely held Promira Software Inc. last month resulted in a loss of $22 million, or 90 cents a share.

"What you had was an upside surprise in top line revenue and an upside surprise on bottom line earnings," Crook said. "Manugistics is an incumbent competitor in a market that is accelerating."

Until yesterday, Crook said, the company's stock price was suppressed by concerns that SAP AG, a German software developer, would provide difficult competition.

"The report yesterday said this is not slowing down the numbers any," he said. "My own view is Manugistics has raised very substantial barriers to entry."

Crook, who has strongly recommended buying the stock for several months, yesterday increased his target price from $50 to Manugistics has more than 1,000 employees worldwide, 600 of them in Rockville.

"The supply chain management software market is exploding," Manugistics Chief Executive William Gibson told Bloomberg ,X News. "If we continue to dot our 'i's and cross our 't's, and perform like we have the last few years, we should have a very good year."

Pub Date: 3/28/98

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