Benchmark Starts Saba Software (SABA) at Buy; Emerging (And Overlooked) Cloud Opportunity

Benchmark initiates coverage on Saba Software (NASDAQ: SABA) with a Buy. PT $15.

Benchmark analyst said, "SABA is a leading provider of enterprise learning management systems, and was instrumental in introducing packaged learning systems to the corporate landscape...SABA is in the midst of a revenue stall and materially lower operating margins as the Company transitions its business model to a subscription revenue model from conventional software licenses. While this move will produce a more stable and highly visible recurring revenue stream, SABA faces materially lower revenues, operating margins and earnings in the near- to intermediate-term until recurring revenues catch up and offset declining license sales."

"We believe SABA is an attractive acquisition candidate given its Cadillac-like
learning solutions and Fortune 500 customer base. The LMS software sector has recently been a hotbed of M&A activity given the recent Cornerstone IPO and highprofile deals from SuccessFactors (Nasdaq: SFSF) (Plateau) and Taleo (Nasdaq: TLEO) (Learn.com)."

"We expect the Company will earn non-GAAP EPS of $0.11 on $118 million in total revenue for FY11, and ($0.11) on $129 million in revenue for FY12."

For more ratings news on Saba Software click here and for the rating history of Saba Software click here.

Shares of Saba Software closed at $10.44 yesterday.

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