Opsware Inc: Simplifying information technology

When it comes to enterprise IT operations, every bit of automation you can get is a plus. A leader in the art of devising efficient automation systems is headquartered in Sunnyvale, California.

Opsware Inc. (NASDAQ: OPSW) provides data center software products that automate key server, software, and application operations. The company's programs re-allocate resources, control software updates, manage provisioning and automate change cycles for servers and business applications. The firm sells its products directly and markets them through resellers and systems integrators. Customers include General Electric (NYSE: GE), Home Depot (NYSE: HD), JP Morgan Chase (NYSE: JPM), Nortel Networks (NYSE: NT) and Target Corporation (NYSE: TGT).

Opsware pleased investors late last month, when it reported Q1 results that beat top line analyst estimates and matched predictions on the bottom line. Management also guided Q2 and FY08 expectations to levels in-line with analyst ranges. Deutsche Securities subsequently upgraded the shares to "buy" and declared an $11 price target. The news popped the shares out of a May "cup" into the June "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle."

Brokers recommend the issue with two "strong buys," four "buys" and seven "holds." Analysts expect a 14.6% growth rate, through the next year. The OPSW Price to Book ratio (6.38) and Sales Growth rate (28.66%) compare favorably with industry averages. Institutional investors hold about 78% of the outstanding shares. Over the past 52 weeks, the stock has traded between $6.23 and $9.90. A stop-loss of $7.75 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.