As Other Tech Stocks Languish, B2Bs Take Off - TheStreet

Business-to-business stocks continued their march upward on the back of renewed enthusiasm Tuesday, even as the broader

Nasdaq

was in the red.

The stocks were up on a slew of Wall Street research notes highlighting a rosy outlook for the sector in September. (

TheStreet.com

wrote

a story last week about that enthusiasm.)

Commerce One

(CMRC)

received a push from positive comments by

Salomon Smith Barney

analyst Gretchen Teagarden. She started coverage of the stock with a speculative-buy rating and gave it a price target of $88. The stock was up $2.25, or 4.9%, to $69.25. (Salomon hasn't done underwriting for Commerce One.)

Commerce One has been

culling favor on Wall Street lately, in part because of its recent alliance with German software maker

SAP

(SAP) - Get Report

, as well as its value compared to its more richly priced archrival

Ariba

(ARBA)

.

The Old Speculative Neutral

Teagarden wasn't as kind to Ariba. She started coverage of it with a speculative-neutral rating and a $145 a share price target. Ariba started the day at $166.25. While she noted the usual positives about the company being a first mover, Teagarden also cited several risks. They include Ariba's exposure to a lot of "high-risk B2B dot-com clients," which means she's worried that the online exchanges that buy from Ariba could go under. (Salomon hasn't done underwriting for Ariba.)

Teagarden also noted that Ariba might have problems hiring and training consultants to get its software up and running at its clients' firms. Good consultants who know how to make all this new B2B stuff work have been hard to come by lately. That's one of the reasons Commerce One is buying

AppNet

(APNT)

, the IT consulting firm. (Salomon hasn't done underwriting for Ariba or Commerce One.)

Arbia was up 19 cents to $166.44 a share.

The Rest

Other stocks getting a kick Tuesday were

SciQuest

(SQST)

, up 12%,

Ventro

(VNTR) - Get Report

, up 24%,

PurchasePro.com

(PPRO)

, up 8.9%,

VerticalNet

(VERT)

, up 4.4%, and

FreeMarkets

(FMKT)

, up 5.7%.

Some of those increases, including those for PurchasePro, SciQuest and Ventro, may have resulted from short-sellers covering their positions. Short-sellers bet a stock will fall, but when it rises, they have to unwind their positions, which means they have to buy the stock.

But VerticalNet and FreeMarkets likely were benefiting from a positive note out of

Goldman Sachs

entitled "Renewed Interest Fueled by Upcoming Catalysts for B2B Stocks."

But the note didn't highlight any fundamental change that would explain why B2B stocks were rising again, something Goldman analyst Jamie Friedman conceded. (Friedman has VerticalNet on the firm's recommended list, its highest rating, and he rates FreeMarkets a "trading.")

"Some of these names have come too far too fast, some of them went down too much," Friedman said. "They weren't rational on the way up, and they weren't rational on the way down. It's hard to pick a point in time when they are rational." (Goldman has done underwriting for FreeMarkets, but not VerticalNet.)

A New Standard?

Meanwhile, investors yawned at other B2B news on Tuesday. Ariba,

IBM

(IBM) - Get Report

and

Microsoft

(MSFT) - Get Report

have developed a directory for B2B e-commerce, except that those companies like to call it a new standard. It will list contact information for companies participating in B2B, as well as product descriptions and instructions on how to communicate with their computers.

But with a name like

Universal Description, Discovery and Integration

, or UDDI, how could investors resist?

Somehow, they managed. Along with Ariba's listlessness, IBM was off 1.8% and Microsoft fell 0.1%.