) to buy from strong buy.
Analyst Susan Passoni says her downgrade is based on a weaker than previously expected outlook for the rest of 2002. She notes revenues beat her estimates, but says allowances for the Adelphia exposure and higher than anticipated legal fees impacted the company's margins. Passoni cut her $1.84 2002 earnings per share estimate to $1.47, and cut the $2.13 2002 earnings per share estimate to $1.60.
While the environment remains challenging and Passoni says she doesn't foresee a recovery until the second half of 2003, she still views CSG as attractive based on strong cash flow generation and a recurring revenue stream. She has a $20-$25 12-month target.