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JP Morgan cuts NetIQ Corp. (NTIQ
) to underweight from overweight.
Analyst Aaron Schwartz says revenue shortfall is primarily due to lower close rates on small/medium size deal opportunities and is a significant setback in its margin expansion plans.
Given the company was comfortable with projections at its analyst meeting on Mar. 8, it communicated a commitment to its core business with last week's announced sale of WebTrends and believes management's credibility will be questioned.
When he factors in proceeds from the sale of WebTrends, his company has about $7 per share in cash. Schwartz thinks the cash balance represents a valuation floor.