CA Gets Lukewarm Endorsement
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Less than a week after CA slipped past analyst estimates in its third quarter, Zack's Investment Research on Tuesday initiated coverage of the business software maker with a tepid "neutral" recommendation.
CA, which pocketed more than $233 million, or $0.43 a share, on sales of $1.13 billion in its most recent quarter, is now carries either a "hold" or "neutral" recommendation by nine of the 14 analysts covering the stock.
CA (NASDAQ: CA) shares inched up $0.12, or less than 1 percent, to $22.14 in Tuesday trading. The stock peaked at $24.15 a share in October after bottoming out at $15.13 a share in March.
Its third-quarter results included an additional $10 million boost in sales from its September acquisition of network performance management software developer NetQoS.
Company officials said the Islandia, N.Y.-based company exited the quarter with a backlog of more than $7.9 billion in sales, up 9 percent from the year-ago quarter. Total bookings for the quarter checked in at $1.37 billion, up 10 percent from the year-ago quarter.
"Acquisitions have helped the company expand its product portfolio, enabling it to enter the cloud computing business and cater to customers across all segments of the IT market," Zack's analysts wrote in a research note.
"However, we are a bit concerned about the intense competition in the software and cloud-computing space from big players like IBM and HP," the note continued. "We are also concerned about CA's high debt balance."
Along with delivering its third-quarter results Thursday, CA also named William McCracken as its new chief executive, replacing John Swainson, who joined the company in 2004 and is widely credited for helping turn the once scandal-ridden firm around and returning it to relevance in the ultra-competitive business software sector.
CA reiterated its previous guidance of total sales growth of between 2 percent to 4 percent, or $4.3 billion to $4.4 billion in 2010.
It expects to return non-GAAP earnings of between $1.60 a share and $1.71 a share for the year.