Informatica hits 2-year low on weak outlook

Fri Jul 6, 2012 10:06pm IST

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(Reuters) - Shares of Informatica Corp (INFA.O) plunged as much as 35 percent on Friday after the data-integration software maker forecast a weak second quarter hurt by delayed contracts.

The outlook prompted at least two brokerages to downgrade the stock and several others cut their price targets.

Informatica on Thursday forecast second-quarter revenue of $188 million to $190 million, below analysts' expectations of $217.2 million.

"The miss was due to slipped and downsized deals as customers were increasingly cautious and needed more levels of approvals and stronger business justification," Roth Capital Partners analyst Nathan Schneiderman wrote in a note.

Uncertainty in Europe, Informatica's second-largest market that brought in a quarter of its 2011 revenue of $784 million, has hurt two of his top segments - financial services and the public sector.

"Decision-making in Europe was delayed and approval thresholds became more stringent given the macro uncertainty over the last few weeks of the quarter," Stifel Nicolaus analyst Tom Roderick wrote in a note to clients.

Informatica, which helps companies access, integrate, and consolidate data across a variety of systems and users, counts Dell Inc DELL.O and BNY Mellon (BK.N) among its customers.

Deutsche Bank said the company's average selling price growth has been inconsistent in the last three quarters, after posting consistent double digit growth till the second quarter of 2011.

The brokerage downgraded the company's stock to "hold" from "buy" and cut its share-price target to $35 from $53.

Analysts also said the company is facing tough competition from International Business Machines Corp (IBM.N), Oracle Corp ORCL.O and Tibco Software Inc (TIBX.O).

"With peers like Oracle and Tibco recently reporting and providing more constructive forward quarter guidance, Informatica will not and should not get a pass for company-specific execution issues," Stifel analyst Roderick said.

Jefferies and Co downgraded the stock to "hold" from "buy."

Shares of the Redwood City, California-based company were down $15.06 at $28.31 in early trading. The stock, which hit a near two-year low, was the top percentage loser on the Nasdaq.

(Reporting By Aurindom Mukherjee and Supantha Mukherjee in Bangalore; Editing by Maju Samuel)

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