Canaccord Genuity downgraded Exa Corporation (NASDAQ: EXA) from Buy to Hold with a price target of $15.00 (from $18.00).

Analyst David Hynes commented, "We really wrestled with what to do with our rating on Exa. On the one hand, any shortterm buying pause that is caused by the uncertainties of a prospective border tax or the roll-back of emissions standards should in theory be temporary. If simulation consumption patterns are in fact as steady as management suggests, then the near-term purchasing shortfall will be rectified by mid-year upgrades, and all will be good. That’s supportive of a continued BUY. On the other hand, we get the sense that management has pretty limited visibility into customers’ budget allocations and plans. Given the rapid reversal in tone from an upbeat analyst day only 90 days ago, this team now likely has a perceived credibility issue – warranted or not – which will take time to disprove.

As our title suggests, we ultimately decided that a downgrade to HOLD is the right call. With F2018 growth now set to fall in the mid-single digits and any plans for continued margin expansion pushed out by at least a year, we’re not sure what would compel incremental investors to buy EXA shares here. Thus, in our view, the prudent move is to step to the sidelines for now. We hope this is a short-lived change, as we believe in the long-term prospects of this business, but we’ve learned too many times before that it’s best to err on the side of caution in small-cap, which is what we’re doing here. HOLD.

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Shares of Exa Corporation closed at $15.69 yesterday.