) to neutral from outperform.
Analyst Timothy Byrne says initial 2005 guidance was very disappointing with revenue in line, but operating income, EBITDA, and earnings per share below consensus. He still believes the business model is fundamentally attractive. However, he downgrades due to peak valuation, disappointing outlook on organic growth, operating margin, and free cash flow.
Byrne notes management is continuing to invest in future growth but cash generation is less clear. He puts estimates and target under review, and expects to lower toward the midpoint of 2005 guidance. At $32.50, the stock trading at 13 times its third-quarter 2004 EBITDA run rate, and at the high end of its historical range.