Updated from 2:09 p.m. EDT

Shares of J.D. Edwards ( JDEC) jumped Thursday, a day after the company reported third-quarter earnings that beat Wall Street estimates and offered an earnings outlook in line with analyst expectations.

Shares of J.D. Edwards rose $2.32, or 19.58%, to close at $14.17.

On Wednesday, the Denver-based software maker reported third-quarter earnings of 8 cents a share, beating estimates by two pennies, and projected fourth-quarter earnings of 11 cents a share, in line with Wall Street estimates gathered by Thomson Financial/First Call.

However, at $54.9 million, J.D. Edwards' third-quarter license revenue came in short of the $58 million previously projected by the company. Its forecast for $245 million in fourth-quarter revenue was a little short of the $252.1 million expected by analysts.

Brent Thill, an analyst with Credit Suisse First Boston, attributed J.D. Edwards' climb Thursday to its beating most estimates while other vendors have missed. In addition, the company is one of the few software makers to report sequential and year-over-year revenue increases.

"Although guidance was lowered on Q4, there was enough to get people excited, especially at the valuation that JDEC is sitting at," said Thill, who has a buy rating on J.D. Edwards. The technology group at CSFB, under a different company, took J.D. Edwards public.

In addition, Thill said he believes J.D. Edwards enjoyed some fallout from an improvement in sentiment about software stocks overall. "On the belief that the environment isn't getting any worse, the Street is starting to warm up to more software names in general," he said.

Just look at Oracle ( ORCL) and PeopleSoft ( PSFT), he said. Since Aug. 7, Oracle shares have increased 16.1% and PeopleSoft shares have zoomed up 29.7%. J.D. Edwards shares are up 27.9% since Aug. 7.

While falling short with license revenue, J.D. Edwards beat overall revenue estimates on stronger-than-expected service revenue. Third-quarter revenue rose 9.4%, to $229 million, from $209.4 million a year earlier and 2.4%, from $223.6 million in the previous quarter. Wall Street pegged third-quarter revenue at $222.2 million.

Analysts attributed that strength to the company's increased focus on selling new customer-relationship management and supply-chain management products to its installed base of 6,400 customers. In addition, the company released a new version of its software that enables customers to buy smaller pieces rather than an entire suite.

On a price-to-earnings basis, Thill acknowledged that J.D. Edwards' valuation has gotten "somewhat rich." With Thursday's run, shares are trading at 41 times Thill's 2003 earnings estimate. But Thill countered that he has a $19 12-month price target on the company, based on a discounted cash-flow analysis that assumes JDEC grows a little more than the 15% expected growth for the enterprise resource planning sector.

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