BMC Software: Goldman Cuts Rating, Ests; Stock Slides
BMC Software (BMC) shares are lower today after Goldman Sachs analyst Sarah Friar cut her rating on the stock to Neutral from Buy. She trimmed her non-GAAP EPS estimates for the company’s March 2009 fiscal year to $2.08 from $2.10; for FY 2010 she goes to $2.39 from $2.40. Friar cut her price target on the stock to $37 from $41.
Friar says her value-centric thesis on the stock has been “temporarily weakened” by its recent deal to acquire BladeLogic (BLOG). “The formerly clear path to margin expansion has been delayed by dilution, the company has less cash for buybacks and the potential for upside to top-line estimates is somewhat muddied as Blade is incorporated,” she writes. “Thus, we feel the shares are likely to pause near-term.”
Friar also says that her “latest checks across the software group” raise increasing concerns about the delay or downsizing of large software projects, “where we believe BMC is exposed.”
Goldman replaced BMC on its “Americas Conviction Buy List” with CA (CA). Friar writes that CA’s restructuring remains “well on track,” with “a clear path to significant further margin upside.”
BMC today is down $1.76, or 5.4%, to $30.93. CA is up 7 cents at $23.31.
A 5% hit for some silly analyst downgrade of a penny or two is ridiculous.They can’t predict anything within a dollar let alone a penny
Who is Sarah Friar - just another weak analyst trying to justify her salary. If you buy back stock they critise for not investing in new tech - if you invets in new tech they critize for no buy backs. Weak analyst.
Take it as an opportunity. Rarely do mild analyst downgrades — or upgrades — have a lasting effect on a good company’s stock. Usually the stock retraces its move in a matter of days.
BMC is going down!!

Tech Trader Daily is a blog on technology investing written from Palo Alto, California by long-time Barron's West Coast Editor Eric J. Savitz. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields.