Shares of i2 Technologies ( ITWO) and Manugistics ( MANU) rose Thursday after Banc of America Securities upgraded both stocks to a buy rating and said the supply-chain software makers have hit bottom.

Shares of i2 rose 22 cents, or 4.1%, to $5.65 in recent trading. Shares of Manugistics rose 23 cents, or 1.5%, to $15.58.

Banc of America Securities analyst Peter Coleman said the third quarter, which ended in November, marked the bottom for Manugistics. He said he believes the Rockville, Md.-based company is positioned to increase market share because software vendors and consultants are focusing more on Manugistics' products. He set a price target of $25.

Coleman said he believes the first quarter, which ends in March, is the bottom for i2, whose software helps manufacturing companies anticipate and react to customer demand. The analyst said he believes that sales have stabilized and set a price target of $10 for Dallas-based i2, which has long boasted a strong lead ahead of Manugistics.

"I think the road here is still going to be a bit rough," said Coleman, whose firm has done business with Manugistics. But he believes both stocks have compelling valuations.

i2 shares, down about 30% since the beginning of the year, currently trade at 2.9 times revenue for fiscal year 2002. Manugistics has dropped 23% since the beginning of the year but has lost about two-thirds of its value from a 52-week high of $48.19. Coleman said he believes both companies will be poised to revise earnings over the next several quarters.

A day earlier, Legg Mason initiated coverage on Manugistics with a buy rating and target price of $23.

Both i2 and Manugistics were especially hard hit in the economic downturn last year. Manugistics turned in a dismal loss of 16 cents a share for the second quarter, which ended in August, though Wall Street had initially expected a 3-cent profit. i2, meanwhile, cut 10% of its workforce in July to counter sagging sales.

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