Shares of NextCard Inc. surged more than 45% Thursday, heading up a strong day in financial stocks, after the online credit card issuer told investors it expects to turn a profit by the end of 2001, a year ahead of schedule.
At a meeting with investors, NextCard also said it expects revenues of $1 billion in 2003, implying a three-year annual revenue growth rate of 75%. "We are very excited about our company's long-term vision and growth prospects," said John Hashman, president and chief executive, in a press statement.
NextCard rose $3.6875, or 45.74%, to close at $11.75.
Meanwhile, financial stocks rallied, led by Citigroup Inc., which gained $1.5625, or 3.03%, to $53.0625. Some investment banks also made up for Wednesday's losses. Morgan Stanley Dean Witter & Co. climbed $1.375 to $80.4375, and Merrill Lynch & Co. $1.3125 to $69.8125.
Elsewhere in the market, Kirstin B. Gard, an analyst at Bear Stearns Cos., initiated coverage of City National Corp. with a "buy" rating and a target price of $42.
City National rose $1.4375, or 4.25%, to $35.3125.
Ms. Gard said she expects the $1.6 billion-market cap Beverly Hills banking company's earnings to grow 12% in the next three years. She also expects the stock to generate earnings of 67 cents in the fourth quarter, 2 cents less than the analysts' consensus, $2.71 this year, in line with the consensus, and $2.99 next year, 2 cents more than the consensus.
The company's third-quarter deposits grew 19% from last year, and deposits are expected to show more strong growth, she wrote in her note.
City National "is the best-managed mid-sized independent bank remaining in California," she wrote. "As such, it is a likely takeover target for an out-of-state bank looking to enter the attractive California market."
Shares of the student loan company USA Education lost $1.1875, or 2.06%, to $56.375 after Thomas O'Donnell of Salomon Smith Barney lowered his rating for the company late Wednesday to "outperform" from "buy."
Mr. O'Donnell wrote in a research note that the stock has gained 50% since September, passing his target price.
Of interest today will be the New York Stock Exchange's listing of the German insurance company Allianz AG Holding. Analysts said that the Munich giant's goal is to use its presence on the exchange to acquire U.S. insurers.
Allianz already has some U.S. exposure in its casualty and life business. The United States accounted for 11.9% of the company's total gross premiums last year.
The company also owns U.S. asset management firm Pimco Advisers Holdings LP, and on Oct. 18 Allianz announced a deal to buy Nicholas-Applegate of San Diego.
In a press conference Thursday, Allianz chairman Henning Schulte-Noelle said there are no insurance acquisitions in the pipeline, but Steven Bird, a London analyst at Merrill Lynch, said the firm is eager to hit the merger and acquisition market.
"They are quite opportunistic," he said. "They look for good management."
Allianz might find mutual interest for such intents, Mr. Bird said. The firm is known for keeping acquired companies independent and their management intact, a philosophy some U.S. companies might find attractive, he said.