Three investment houses downgraded their recommendations for Amdocs Ltd. (NYSE: DOX) after the company published its financial report for the first fiscal quarter of 2009 yesterday. Oppenheimer, Cantor Fitzgerald, and Wedbush Morgan all reacted to the company's lower results and forecast for more of the same. Only RBC Capital Markets reiterated its recommendation.
Amdocs posted a GAAP-based net profit of $74.2 million, 22% less than for the corresponding quarter. Revenue totaled $753.8 million revenue, below the company's guidance of $785-$810 million, and it predicts a further drop to $700-$720 million for the second quarter.
Oppenheimer analysts Shaul Eyal and Hugh Cunningham noted that while Amdocs reduced its costs and that its cash flow was good, its forecasts for the next quarter are below the market consensus and that the economic crisis was hitting the company harder than expected. They cut their recommendation for the share from "Buy" to "Hold" and declined to set a target price, which was previously set at $34.
Cantor Fitzgerald analyst Edward Jackson also cut his recommendation for Amdocs from "Buy" to "Hold" and slashed its target price from $26 to $16. He notes the company's "aggressive actions" to cut costs, which should help it preserve its profit margins and cash flow despite the hard times.
Wedbush Morgan cut its recommendation for Amdocs for the second time in a week, this time "Buy" to "Hold", after cutting it from "Strong Buy".
RBC Capital Markets analyst Daniel Meron reiterated his recommendation for Amdocs at "Outperform", but cut his target price from $32 to $25. He cited the company's disappointing outlook.
Amdocs's share rose 1.8% yesterday to $17.35.
Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2009
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