Net Sector Keeps Rolling in the Green

Amazon and eToys are heading in different directions, though, after comments from a J.P. Morgan analyst.
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Is it outdated to use the term broken record? Do Internet investors even know what a record is? Well, cliches aside, the Internet sector was repeating what it's been doing for most all of December -- and most all of November, for that matter: going up.

TheStreet.com Internet Sector

index was up 35.81, or 3.3%, at 1108.08 in recent trading. Investors continued to pour money into technology stocks with few concerns.

Amazon.com

(AMZN) - Get Report

was up 19 15/16, or 22%, at 108 1/2 after some positive words from

J.P. Morgan

, which initiated coverage of the stock with a buy rating and a 160 price target. Analyst Tom Wyman noted that by the end of the next decade, online shopping is estimated to total $1.8 trillion globally. He indicated that if Amazon maintained its 5.5% e-tailing market share, it would generate close to $100 billion in sales by 2009 and make it one of the largest retailers, online or offline.

eToys

(ETYS)

was one of the few Internet stocks on the downside after Wyman initiated coverage of the online retailer with a market performer rating and a 12-month price target of 50. It was down 3 1/2, or 6.8%, at 49 5/8.

Wyman wrote that eToys was trading at 26 times his calendar 2000 revenue forecast, compared with a peer group average of 12 times. He also noted that recent

Media Metrix

figures for the Thanksgiving week indicated that

toysrus.com

surpassed eToys in unique visitors. He wrote that "if Amazon or

Toys R Us

(TOY)

surpasses eToys in online revenues this Christmas, or any time in the next six to 12 months, we believe the stock will come under significant pressure."

Elsewhere,

Red Hots were soaring.

Internet Capital Group

(ICGE)

was up 13 7/16, or 6.3%, at 226 3/4. As we

reported yesterday, ICGE will be receiving a $50 million investment from

AT&T

(T) - Get Report

and $40 million from a Kuwaiti investment company,

Internet Assets

, according to a filing with the

Securities and Exchange Commission

.

CMGI

(CMGI)

, another Internet incubator, was up 11 15/16, or 6%, at 201. Gains come despite losses in

Engage Technologies

(ENGA)

, which CMGI holds a majority interest in, following its earnings report last night.

Engage, a provider of profile-driven Internet marketing solutions and services, posted a loss of 22 cents a share for its fiscal first quarter, much better than the

First Call/Thomson Financial

estimate of a 28-cent loss. Sales of $8.3 million represented an 18% rise over the $7 million in sales seen in the fourth quarter. Engage was down 3 1/4, or 4.5%, at 68 3/4, thanks to profit-taking after the stock reached an all-time high of 73 15/16 yesterday.

Shares of

Red Hat

(RHAT)

have been on a tear lately (and that's an understatement), but was pushing on toward 300 following news of a deal with

Veritas Software

(VRTS) - Get Report

. Veritas said its software used to back up data on computer systems is being shipped with Red Hat's Linux 6.1 Deluxe product.

In early trading, Red Hat was up 12 3/4, or 4.7%, at 284, while Veritas was up 5 15/16, or 5.7%, at 110 7/16. While the companies are getting a boost from this news, the announcement is merely a follow-up to an announcement the companies made back in November that they would be working together. But in the current environment, news of almost any kind has served to rally Red Hots like Red Hat.

In other action by analysts,

Salomon Smith Barney

analyst Richard Zandi raised estimates and price targets for both

E*Trade

(EGRP)

and

Ameritrade

(AMTD) - Get Report

due to stronger-than-expected growth in trading volumes. Zandi increased price target on E*Trade to 36 from 26 and on Ameritrade to 27 from 19. Zandi wrote that he was not changing earnings-per-share estimates for the companies because extra revenues would likely be used to bolster spending in other areas. He also noted that there is near-term risk based on a potential for a slowdown in market activity the rest of the year due to Y2K.

In recent trading, E*Trade was up 1 1/8, or 3.7%, at 31 3/4, while Ameritrade was up 1/2, or 2.2%, at 23 3/16.