Shares of online credit card company Nextcard (Nasdaq: NXCD) rocketed more than 21 percent higher on Wednesday, gaining 7-3/4 to 44-1/4. Both Donaldson, Lufkin & Jenrette and Piper Jaffray spurred the runup by initiating coverage of Nextcard with bullish ratings. DLJ gave Nextcard a buy rating and set a price target of $70, while Piper Jaffray gave the company a strong buy rating.
Even though the recommendations come from firms that helped underwrite Nextcard’s initial public offering on May 14, there really are good reasons to be bullish about the company. The Internet-only company is pioneering the next phase of the credit card business and is receiving 25 percent of all online credit-card applications. Applicants can often find out whether they have been approved in a matter of minutes, and bills can be paid online.
Nextcard is one of the rare Internet stocks that is currently trading at its highs of the year. The company went public at $20 and closed its first day of trading at $33.50. It’s done quite well ever since, and don’t be surprised if it keeps on climbing.