Analysts raced to
defense Thursday after reports of insider selling pummeled the stock.
Both Jefferies and J.P. Morgan issued reports saying investors overreacted to news that EarthLink CEO Garry Betty sold 100,000 shares last month. That's 9% of his holdings, as of April.
Disclosure of that sale sent shares of the Internet service provider down nearly 14% on heavy volume Wednesday, with the stock dropping from $13.62 to $11.75. By Thursday afternoon, EarthLink's shares had recovered to $12.
The slide may also have been exacerbated by shareholder jitters about possible continued sales of EarthLink stock by major shareholder
( FON), as well as by momentum sellers.
Analysts following EarthLink are waiting impatiently for the fourth-quarter 2001 results for the ISP, which gets a clear majority of revenue from subscriptions for dial-up Internet connections, but gets all its revenue growth from high speed, or broadband, Internet connections. The company is in the midst of rolling out its broadband service on diffferent cable systems operated by
AOL Time Warner
Frederick Moran of Jefferies has a buy rating on EarthLink, with a price target of $22, while Paul Noglows of J.P. Morgan has a buy and a $20 price target. Neither has done recent banking for the company.