Needham & Company Maintains a 'Hold' on Pegasystems (PEGA); Big Deal Deceleration Hits September Quarter
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Price: $31.88 -1.36%
Rating Summary:
11 Buy, 11 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 20
Rating Summary:
11 Buy, 11 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 20
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Needham & Company maintains a 'Hold' on Pegasystems (NASDAQ: PEGA) price target lowered to $32.00.
Needham analyst, Richard Davis, said, "Pegasystems missed unguided quarterly estimates meaningfully for the second time in four quarters. Estimates will almost certainly come down sharply and it will be difficult for analysts to defend the stock. More importantly, investors are about as risk averse as we've seen them in years, so we expect some to decide to bail from the stock now and revisit the shares once there is better earnings visibility. The stock was down sharply after-hours (17%), so that may be where most of the volume trades. However, in a harsher scenario, we could see the stock lower before recovering. With margins depressed, you're probably looking at an EV/revenues valuation of 1.5-2.0x on somewhat visible 2012E revenues of $450-500, a multiple that gets you a stock price in the $22-$28 range."
"We have erred on the side of caution and taken a more conservative cut at C2012 than management suggests. Our revised estimates of $485 million and $0.95 compare to previous consensus of $513 million and $1.50."
For an analyst ratings summary and ratings history on Pegasystems click here. For more ratings news on Pegasystems click here.
Shares of Pegasystems closed at $37.04 yesterday.
Needham analyst, Richard Davis, said, "Pegasystems missed unguided quarterly estimates meaningfully for the second time in four quarters. Estimates will almost certainly come down sharply and it will be difficult for analysts to defend the stock. More importantly, investors are about as risk averse as we've seen them in years, so we expect some to decide to bail from the stock now and revisit the shares once there is better earnings visibility. The stock was down sharply after-hours (17%), so that may be where most of the volume trades. However, in a harsher scenario, we could see the stock lower before recovering. With margins depressed, you're probably looking at an EV/revenues valuation of 1.5-2.0x on somewhat visible 2012E revenues of $450-500, a multiple that gets you a stock price in the $22-$28 range."
"We have erred on the side of caution and taken a more conservative cut at C2012 than management suggests. Our revised estimates of $485 million and $0.95 compare to previous consensus of $513 million and $1.50."
For an analyst ratings summary and ratings history on Pegasystems click here. For more ratings news on Pegasystems click here.
Shares of Pegasystems closed at $37.04 yesterday.
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