Aladdin Knowledge Systems Ltd. (ALDN)

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Aladdin shares rise over 6.4% on NASDAQ following upgrade

09.4.06 | 11:35 By TheMarker

Shares of Aladdin Knowledge Systems (NASDAQ: ALDN) rose over 6.4% on Friday after an analyst upgraded the stock and said the company's digital rights management (DRM) software could pick up in the first quarter
DRM, technology used to protect intellectual property, represents about 70% of Aladdin?s revenues.

Andrey Glukhov, an analyst with Brean Murray, Carret & Co. upgraded the stock to "Strong Buy" from "Accumulate," and lifted his price target from $21 to $26.
"We believe the company's DRM business, is likely to return to solid growth in the first quarter of 2006, after posting disappointing 4% year-over-year growth in the fourth quarter of 2005," Glukhov wrote in a note.

Glukhov also noted that the stock trades at a discount to its peers, and suggested the company's eToken business is undervalued. Aladdin's eToken is a USB device used to generate secure passwords to access protected networks.

Glukhov expects the company to earn $1.13 per share for the year, a penny higher than the average estimate of analysts polled by Thomson Financial.
Aladdin reported a record $81.8 million in sales in 2005.The figures represented a growth rate of only 18.4%, following a rise of 26.3% in 2004. Similarly, while profits grew by $6.1 million in 2004, the firm ended 2005 with profits of $5.6 million, after taking out a one-time charge of $2 million to settle lawsuits.
Aladdin ended 2005 with $12.4 million in profits, as opposed to $8.8 million recorded in 2004.

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