Compuware Maintained at Neutral - Analyst Blog
04 Settembre 2012 - 1:30PM
Zacks
We reiterate our Neutral
recommendation on Compuware Corporation (CPWR).
The company’s cost effective initiatives and incipient
buy-back activities are likely to partially neutralize the effects
of the weak economic condition and ominous competition prevailing
in the industry.
Compuware’s superior end-to-end
Business Service Delivery approach helps IT organizations to move
from a reactive and operations-oriented process to one that is
proactive and business-driven, across both the distributed and
mainframe environments.
In addition, the company is
expected to achieve a leadership position within the industry
through its advanced Gomez offering, especially designed for
cloud-related services and Big Data trends.
The company’s primary objective is
to provide user-friendly, technologically advanced services to its
clients in IT organizations through its improved software as a
service (SaaS), professional and application services portals. The
company’s Application Performance Management (APM) and Covisint
solutions segments are considered as its key growth drivers. In the
first quarter of fiscal 2013, the APM segment’s revenues surged 28%
annually, led by the dynaTrace acquisition while Covisint recorded
a revenue growth of 27%.
One aspect, which has forever been
an integral part of Compuware’s total approach, is its desire to
return optimum value to its shareholders through buy back
activities. During the first quarter of fiscal 2013, Compuware
spent nearly $15.4 million in buying back of nearly 1.7 million
shares of its common stock. Hence, based on the company’s existing
trends we can expect similar moves on the part of it in the
upcoming quarters as well.
The company’s administrative and
general expense in the first quarter of fiscal 2013 was $39.7
million down 4.3% year over year, indicative of its cost control
measures. Huge cost reduction strategies are expected to post
healthy operating margins of up to 26.5% in fiscal 2015 from 15.0%
in fiscal 2012.
Although Compuware’s intent and
advances towards meeting long-term goals are remarkable, we are,
however, concerned about the intensely competitive landscape.
According to management, the company competes with more than 40
firms in one or more of its offerings. Rivals include BMC
Software Inc. (BMC), CA Technologies
(CA), International Business Machines Corporation
(IBM).
Additionally, the majority of the
company’s software products are designed for use with IBM and
IBM-compatible mainframe computers. As a result, the majority of
revenue from software products depends on the customers’ continued
use of IBM and IBM-compatible mainframe products.
Compuware generates a substantial
portion of revenue from countries outside the United States. Hence,
as the company establishes its operations internationally; it is
highly exposed to foreign currency fluctuation; hurting
financials.
Hence, until the situation
ameliorates and a brighter picture appears on the scene, we
consider it wise to maintain a sideline stance on Compuware. In the
short run, we have a Zacks #4 Rank on the stock, which translates
into a short-term ‘Sell’ rating.
BMC SOFTWARE (BMC): Free Stock Analysis Report
CA INC (CA): Free Stock Analysis Report
COMPUWARE CORP (CPWR): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Grafico Azioni Xtrackers California Mun... (NASDAQ:CA)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Xtrackers California Mun... (NASDAQ:CA)
Storico
Da Lug 2023 a Lug 2024