Needham & Company Maintains a 'Buy' on Progress Software (PRGS); Attractive Valuation
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Price: $42.77 -2.2%
Rating Summary:
9 Buy, 5 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 22 | New: 20
Rating Summary:
9 Buy, 5 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 22 | New: 20
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Needham & Company maintains a 'Buy' on Progress Software (NASDAQ: PRGS), PT $30.
Needham analyst says, "The full results on the MayQ miss by Progress were mixed, with some areas of encouragement along with areas of disappointment. We believe the May (F2Q11) miss was almost entirely due to sales turnover disruption in the EDS division (mainframe oriented, roughly 10-15% total PRGS revenue). The other divisions, ADP (openedge/legacy) and EBS (newer products incl. CEP, BPM) were both solid performers; in particular, the EBS group was $34.2m and +37% y/y. It is our belief the 12-18 month long reorganization of PRGS, while successful for the last 3+ quarters, had a tail-end of disruption in the EDS division in sales, which may have a lingering impact for that small division; hence the lowered guidance for EDS group. While EBS group performs well, we believe PRGS is now a “show-me” story, as they are shifting from multi-product deals to larger “solution sales” (called Acclelerators) which are vertically tailored, and ambitious in scope and price tag. We believe PRGS is undertaking this “upsell” strategy in order to stimulate topline revenue, which has been modest while operating margin expansion during the restructuring was very strong."
"We are lowering FY11 estimates to follow guidance, and also lowering FY12 modestly from $610m and $2.03 to $606m and $1.94 EPS."
For more ratings news on Progress Software click here and for the rating history of Progress Software click here.
Shares of Progress Software closed at $23.52 yesterday.
Needham analyst says, "The full results on the MayQ miss by Progress were mixed, with some areas of encouragement along with areas of disappointment. We believe the May (F2Q11) miss was almost entirely due to sales turnover disruption in the EDS division (mainframe oriented, roughly 10-15% total PRGS revenue). The other divisions, ADP (openedge/legacy) and EBS (newer products incl. CEP, BPM) were both solid performers; in particular, the EBS group was $34.2m and +37% y/y. It is our belief the 12-18 month long reorganization of PRGS, while successful for the last 3+ quarters, had a tail-end of disruption in the EDS division in sales, which may have a lingering impact for that small division; hence the lowered guidance for EDS group. While EBS group performs well, we believe PRGS is now a “show-me” story, as they are shifting from multi-product deals to larger “solution sales” (called Acclelerators) which are vertically tailored, and ambitious in scope and price tag. We believe PRGS is undertaking this “upsell” strategy in order to stimulate topline revenue, which has been modest while operating margin expansion during the restructuring was very strong."
"We are lowering FY11 estimates to follow guidance, and also lowering FY12 modestly from $610m and $2.03 to $606m and $1.94 EPS."
For more ratings news on Progress Software click here and for the rating history of Progress Software click here.
Shares of Progress Software closed at $23.52 yesterday.
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