Card Fraud Software Firm Back in Favor
Marjanovic, Steven, American Banker
HNC Software Inc., a maker of systems that help banks and other companies anticipate and avoid credit card losses, has been one of the best- performing bank technology stocks over the last few months.
Shares of the San Diego-based company, which are traded on Nasdaq, have appreciated more than 30% since the beginning of March. They were dragged down by some negative reports appearing in investment newsletters, falling as low as $18.25 this year. But they're now trading in the $33 range. Analysts said the rally is no fluke.
HNC "has been our No. 1 pick for a long time," said Wayne Segal, analyst at New York-based Deutsche Morgan Grenfell. "There is nothing fundamentally wrong with the company whatsoever."
Mark Wolfenberger, also with Deutsche Morgan, recently boosted his annual earnings-per-share forecast for HNC by 4 cents to 53 cents (on annual revenues of $84.7 million). He predicts earnings per share of 83 cents in 1998.
Mr. Segal said HNC's stock is one of the beneficiaries of a market that is warming up once again to technology stocks.
Last year, "high-multiple, small technology firms got hit really hard," Mr. Segal noted. But the ones that have probable sources of future revenue growth are being rewarded now.
The bullishness toward HNC is based, in part, on the company's ability to attract new business for its neural network software.
Such software, named for the way it emulates the problem-solving methods of the human brain, makes predictions based on statistical patterns. …