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Velti stock soars on $27M mobile marketing deal

NEW YORK (AP) -- Velti PLC shares soared by nearly 12 percent Tuesday after the mobile marketing technology company said it signed a $27 million two-year deal with an unnamed "major U.S. brand."

THE SPARK: Velti said that the program will "drive increased engagement" with the brand among its existing customers. It didn't say who its client is.

"There is a massive opportunity for brands to engage with existing customers and build lifelong relationships," said Velti CEO Alex Moukas in a statement.

THE ANALYSIS: Jefferies analyst Peter Misek said the deal highlights Velti's "leadership in mobile marketing." He believes that the deal is with a large wireless carrier.

"We also believe this indicates the start of major brands selecting mobile marketing platforms for multi-year deals rather than just one-off marketing campaigns," the analyst wrote in a note to investors. He has a "Buy" rating on Velti.

Misek added that while a lot of investors think that Velti is used to attract new customers and thus could be "subject to potential future anti-spamming regulations, the vast majority of Velti's campaigns are for the retention of existing customers." These people "opt-in" to campaigns and receiving messages from advertisers.

SHARE ACTION: Velti rose $1.01, or 11.7 percent, to $9.61 in afternoon trading. Earlier in the session it reached $9.99 The stock has traded in a 52-week range of $4.99 to $14.65.