) to neutral from overweight.
Analyst Adam Holt says he thinks there are operating concerns with the combined company that push out near-term market expansion and create revenue risk.
He notes Intentia had first-quarter gross margin of 35%, vs. Lawson's 58%, and Intentia currently EBITDA negative. Intentia has cut 700 jobs in last two quarters, which may drive June profitability, but adds revenue and transition risk to the deal.
Holt says, while the deal may be accretive in the first year after close, it may be some time before bottom-line synergies will be realized, as both companies are still working through restructuring amid a choppy application market.