August 28, 1997 2:45 PM PDT

Excite stock rocketing

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Excite's (XCIT) stock has rocketed in the last two days, driven by better-than-expected results from competitor Lycos (LCOS) and a dose of positive reinforcement from analysts.

The stock gained another 30 percent today to finish at 22-17/32, up more than five points from yesterday's close. That follows a 17 percent gain the day before.

"Look at Lycos?Excite is just catching up," said one trader at Robertson Stephens & Company, noting that another analyst today put a price target of $32 on Excite stock--a mark that Lycos passed earlier this week.

Given the higher price target for Lycos, which some analysts have characterized as the No. 3 search engine behind Excite, the trader said investors are likely running up Excite's stock to at least equal that of Lycos.

Shaun Andrikopoulos, an analyst at Alex. Brown, added to the excitement over Excite's stock. He raised his rating on Excite to "strong buy" from "buy." In his report this morning, he noted that the company's current and future fundamentals are "exceptionally strong."

"Excite is trading at a considerable discount, despite the fact that it holds the No. 2 traffic position in the industry," he said.

Andrikopoulos also said that he expects several major announcements over the next 60 to 90 days, surrounding the sector's move towards a more diversified business model that includes online commerce deals, similar to the Yahoo-Amazon.com (AMZN) deal, and the Lycos-BarnesandNoble.com deal.

Those kind of alliances provide a valuable service to everyone involved, said Andrea Williams, an analyst with Vople Brown Whelan. She explained: Not only does this generate additional revenue streams for the search companies, an up-front fee along with a portion of the sales generated at the site, but it also provides a direct outlet for big companies to target a specific audience.

For example, if a user searches for Mt. Everest, not only do Web sites come up in the search results but also in suggested readings. And that is a value to the consumer as well, Williams said.

The technology-laden Nasdaq index is off today, but the search stocks seem to be bucking the trend. Yahoo is up 5/16 of a point; Infoseek is up more than 8 percent. But Lycos, after gaining about 88 percent since August 1, was off 1-1/2.

Yesterday, Williams upgraded Lycos to "strong buy" from "buy," and raised her price target to $45 from $30 a share, based on the strength of the fourth quarter and the potential from partnerships. Andrikopolous raised his revenue estimate on Lycos to $40 million for fiscal 1998, up from $32 million.

 

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