American
Power Conversion Corp. shares may rise to $20 in the next year as
the maker of devices that protect computers from power surges
gains market share and improves margins, holders told Barron’s.
Gross margin, the percent of revenue left after subtracting
the cost of goods sold, widened to 40.6 percent in the third
quarter from 36.1 percent in the year-earlier period as the
company reduced its workforce by 25 percent, added new services
and increased sales abroad, Barron’s said.
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The shares may rise
above $20 in the next several years, Barron’s said, citing Yang
Lie, an analyst at the Third Avenue Fund, which holds American
Power shares. Yesterday, the stock fell 23 cents to $14.84 in
Nasdaq Stock Market trading.
American Power has proven it can do well even as companies
cut back on technology spending, Adams, Harkness & Hill analyst
Eric Prouty told Barron’s. The company gets about 20 percent of
its revenue in large-scale data systems for major corporations,
which have higher margins than small-scale systems for personal-
computer servers, Barron’s said.
Demand for
electronic storage, spurred by rules set up after the Sept. 11
terrorist attacks to preserve financial data, has increased the
need for devices to protect them, Barron’s said. Power brownouts
have also increased demand for backup systems.
Bloomberg News
