Shares of online sporting goods retailer Fogdog Sports (Nasdaq: FOGD) rocketed nearly 57 percent on Monday, climbing 5-3/8 to 14-7/8 after the stock received a buy rating from JP Morgan. Shares of Fogdog traded as high as 18-1/8 on Monday before pulling back.
Monday’s rise is a little hard to figure out. After all, J.P Morgan’s buy rating is no surprise. J.P Morgan was part of the underwriting team for Fogdog’s December initial public offering, and underwriters almost always give favorable coverage to the companies they underwrite. What’s more, Fogdog only received a buy rating, not a strong buy rating, from J.P. Morgan.
Fogdog has some advantages, such as an exclusive deal to sell Nike products online, and its stock might have been due for a rebound after tumbling below the IPO price of $11 a share. However, Monday’s rise looks a bit overdone unless there is something else brewing at the company that not all investors know about.