DemandTec rises after Deutsche starts at 'Buy'

Shares of DemandTec Inc. rose Friday after a Deutsche Bank analyst initiated coverage of the company at "Buy", citing an attractive share value and solid prospects.

DemandTec, which makes software to help retailers and consumer product manufacturers match inventory to demand, rose 31 cents, or 3.7 percent, to $8.75

"We believe DemandTec stands to gain from its unique software-as-a-service positioning, a blue-chip customer base and reasonable insulation from economic uncertainties," analyst Tom Ernst Jr. wrote in a note to clients. "The shares are trading at a significant discount to the SaaS group, and we view risk/reward as attractive."

Software as a service, or SaaS, generally describes Web-based business software hosted and maintained by the vendor.

Ernst said DemandTec is well positioned to benefit from increased retailer adoption of analytic software.

He added that even though retailers have been hit hard by the economic downturn, DemandTec should be fairly well insulated because the market penetration for its type of technology in retail is only about 15 percent, leaving plenty of room for growth.

Furthermore, "usage of the product by retailers is strategic and highly sticky," he said.

Ernst has a $14 price target on DemandTec shares.