The market is abandoning shares of Solar Winds (SWI) this morning.
Late yesterday, the IT management software company announced a sharp reduction in its 2010 financial outlook, citing weakness in both its U.S. government business and with European customers. The company cut its full year forecast to $146 million to $151 million in revenue and profits of 67-70 cents a� share, down from $159 million to $165 million, and 72-75 cents.
The news prompted Street analysts to walk away from the stock en masse.
- Pacific Crest analyst Rob Owens downgrades the stock to Sector Perform from Outperform, citing the company’s “inability to forecast its business and recent missteps.” He notes that the company has missed its own software license forecast for three straight quarters.
- Goldman Sachs analyst Derek Bingham downgraded the stock to Neutral from Buy; he also removed the stock from the firm’s Americas Buy List, and reduced his target on the stock to $16.50, from $21.50. “While we continue to view SolarWinds as a strong franchise and share taker in network management, Q2′s results suggest to us a high level of sensitivity to changes in the macro backdrop, perhaps due to the largely discretionary nature of the product set.”
- Jefferies & Co. analyst Katherine Egbert cut her rating to Hold from Buy, with a new target of $14, down from $22. “We are concerned that continued license weakness could be more than Federal and FX issues,” she writes.� Egebrt adds that the U.S. government business opportunity appears to be “tapped out.”
- Needham analyst Scott Zeller cut his rating to Hold form Buy, warning that even now 2010 estimates could still be at risk.
SWI is down $3.47, or 21%, to $13.05.
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