) to buy from neutral.
Analyst Robert Stimson says he believes Mercury Interactive has reached a key inflection point that will result in accelerating margins and further revenue growth going forward. He says improvement should be driven by: 1) margin expansion due to normalization of the subscriber business, solid renewals, and improving upselling rates, 2) the diminishing impact from lengthening contract terms as older subscription deals begin to renew, 3) and strong product cycles from application vendors should drive improvement in application deployments.
He raised the 2004 EPS estimate to $1.08 and upped the 2005 estimate to $1.35. He has a $42 target.