When All Else Fails, Analysts Should Just Keep Quiet

For two followers of Amazon and @Home, caution did not carry the day.
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SAN FRANCISCO -- For analysts who are monitoring the out-of-control Internet stocks, the best advice might be what their mother gave them: "If you don't have something nice to say, don't say anything at all."

Two of the hottest high stocks today,

Amazon.com

(AMZN) - Get Report

and

@Home

(ATHM) - Get Report

, soared as investors chased Internet stocks with an unmatched fervor. Amazon.com ended up 13 1/2 at 138, bettering the much-discussed 400 level when you take into account its 3-for-1 split earlier this week. As for @Home, it closed up 20.8%, or 16 11/16, to 96 3/8, more than quadrupling in price since its low of 23 1/2 on Sept. 1 of last year.

In a highly publicized debate with

CIBC Oppenheimer's

Henry Blodget in December,

Merrill Lynch's Jonathan Cohen

stated his bearish 12-month price target of "under $50 a share" for Amazon vs. Blodget's target of 400. When contacted today, Cohen acted as if had not noticed the significance of today's move in Amazon. He said the under-50 level was not "a published target," and he had not changed his outlook.

The move for @Home came after the company announced it had entered into a contract with

AT&T

(T) - Get Report

to obtain an ultra-high capacity backbone. It was news that couldn't have come at a worse time for

Ted Henderson

, managing director of research for

Janco Partners

, who downgraded the stock to market peform from buy as of the first of the year.

Henderson said the decision was made on "price performance," and stressed that it was not a downgrade of management and the company's prospects, nor a recommendation to sell @Home. In a Janco report, Henderson stated that @Home would need to go from the 1998 target of 300,000 subscribers to close to 9 million by the end of 2002 to justify its end-of-the-year price. He said the company will have "little hiccups," along the way, such as potential regulatory issues and increased competition that could be stumbling blocks.

"We're just not pounding the table here at 91, saying this is a buy," said Henderson, who added that he was still recommending buying the stock on dips. "We still love the stock. We're just expressing a little caution."

In this market, a little caution is not what investors have in mind.