Unica Corp. downgraded to "market-perform"
Marketing management software company Unica Corp. (Nasdaq: UNCA), was downgraded to “market perform” by Wachovia today due to the belief that 2008 will be a challenging year and that recent accounting issues will likely weigh on the stock in the near-term.
Wachovia analyst Phillip Rueppel says he’s concerned about the exposure Unica has to the financial services segment, as that segment is its largest, and will cause 2008 to be a tough year for the company. Specifically, Rueppel says he believes lower-than-expected spending at the commercial and retail banking sector will pressure Unica’s growth prospects in 2008.
Additionally, the company stipulated that it under-provided state sales tax liabilities and may have not fully recorded related receivables, in each case primarily in prior years. Unica stated that it is currently assessing the liability in each state jurisdiction for current and prior years, and may be required to restate prior period results related to the state sales tax liability.
“The particular issue for Unica, around state tax, appears minor in our view, but any
lengthy period of time without up-to-date filings will cause investors to stay on the sidelines,” Rueppel wrote in a research note.
For fiscal year 2008, the small cap forecasts EPS in the range of $0.31 to $0.34 on revenues of between $121 million and $123 million. The consensus of seven analysts polled by Thomson Financial is for earnings of $0.41 per share on revenues of $120.95 million. Operating income is expected to be between $8 million to $9 million.
The company’s EPS and operating income projections clocked in lower than Rueppel expected and as a result, the analyst lowered his fiscal year EPS estimate to $0.31 from $0.40.
Despite the current adverse business cycle coupled with the accounting overhang, Rueppel says he believes that Unica is poised to address an underserved market, but is also developing and enhancing robust proprietary technology to expand its market opportunity.
“Although we continue to believe that the fundamental prospects are solid long-term, we believe the stock will trade in a range until the accounting issues are cleaned up and better clarity around financial services segment is achieved,” Rueppel wrote.
Shares of Unica (UNCA) slipped 10.78%, or $1.16, to $9.60 at 1:49 p.m. ET. Shares of Unica have been trading in the range of $9.50 to $17.98 for the past 52 weeks.
