Needham & Company Upgrades SolarWinds (SWI) to Buy, Expectations 'Re-Set'

November 8, 2013 7:59 AM EST
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Price: $59.98 --0%

Rating Summary:
    6 Buy, 13 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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Needham & Company upgraded SolarWinds (NYSE: SWI) from Hold to Buy with a price target of $42 after Thursday’s analyst day, during which SWI "re-set" expectations for Operating Margins in 2014.

Analyst Scott Zeller said, "Solarwinds has had a challenging CY13, with misses in the MarQ and JuneQ (SeptQ was solid); we believe the misses and anemic license performance is attributable to an “overheating” telesales team, too small for the surge in transaction volumes at SWI. The analyst day message of “investing for growth” and the corresponding drop in OpMgn signals to us a “re-set” which may give SWI an opportunity to regain momentum."

The firm is Y14 revenue estimate from $390m up to $402m, due to increased confidence in sales growth, based on new sales capacity. CY14 EPS is reduced, going from $1.68 down to $1.49 EPS, reflecting the operating margin guidance for 40-41% in CY14.

For an analyst ratings summary and ratings history on SolarWinds click here. For more ratings news on SolarWinds click here.

Shares of SolarWinds closed at $33.16 yesterday.

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