Piper Jaffray Downgrades NetSuite (N) to Sell; Current Premium Valuation Unwarranted

May 5, 2009 8:41 AM EDT

Piper Jaffray & Co. downgrades NetSuite, Inc. (NYSE: N) from Neutral to Sell.

Piper analyst says, "With the approaching competitive entry of industry giant SAP (NYSE: SAP) into NetSuite's core market, and a likelihood of single-digit revenue growth in 2H:09, the current premium valuation on NetSuite shares is unwarranted, in our opinion...Negatives: 1) 240 new customer adds, down 40% y/y; 2) consistent with our preview, NetSuite indicated it missed its internal bookings plan; 3) y/y decline in deferred revenue, even on an adjusted basis, places NetSuite in the ranks of JCOM and RNOW and signifies weaker demand; 4) Q2 revenue guidance is below consensus; 5) guided FY09 total revenue growth materiallybelow consensus for a second consecutive quarter; 6) OneWorld contributed 27% of new business bookings in the quarter, down from 35% in Q4."

To see more analyst ratings on N Click Here.

NetSuite Inc. provides an on-demand, integrated business management application suite that offers Accounting / Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and e-commerce functionality to medium-sized businesses and divisions of large companies.

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