There’s a spirited debate on the Street Monday morning about what to make of the Diploma-Gate scandal that’s broken out at Concur Technologies (NASDAQ:CNQR), which provides software used to tracked employee travel expenses. (We actually use their software here at Dow Jones, and I find it incredibly irritating and non-intuitive. But I digress.)
As I noted on Friday, Concur has confirmed that CEO S. Steven Singh does not actually have a degree from the University of Michigan, contrary to what the company had stated in SEC filings from 1998 until January 2007. Subsequent filings no longer claim that Singh graduated from Michigan, but the issue came to light publicly last week, when it was uncovered by convicted ZZZZ Best fraudster Barry Minkow, who now spends at least part of his time seeking to uncover - and profit from - corporate misdeeds as part of something called the Fraud Discovery Institute. While Concur in a statement Friday acknowledged the issue, the company also said it had no plans to take any disciplinary action against Singh.
Concur shares took a shellacking on Friday; they have recovered modestly Monday amid a flurry of analyst chatter on what it all means. Here’s a rundown:
- Piper Jaffray’s Mark Murphy upped his rating on the stock to Buy from Neutral, and increased his price target to $25, from $19. He notes that the stock through Friday was down 62% since September, and that investor sentiment “has materially shifted away from expectations of infallibility and unrealistically high growth many years into the future.” He says the Street has finally accepted the fact that deteriorating corporate travel trends do actually hurt Concur, and that revenue and cash flow estimates are likely to be reduced again based upon recent corporate travel and unemployment trends. But he also says that valuation has reached an attractive level. As for the CEO issue, he asserts that “a miscommunication of college credentials is regrettable,” but that Singh “has proven his merit as a business leader and visionary,” and that the board’s support for him “is a positive development.”
- Jefferies analyst Ross MacMillan Monday morning repeated his Buy rating and $26 price target. He says there is “no debate on the facts,” but adds that “the CEO is highly capable and has been instrumental in successfully growing the business over the last decade.”
- Credit Suisse analyst Bryan McGrath Monday morning repeated his Neutral rating on the stock, and trimmed his target to $22, from $25. McGrath says that despite the sharp sell-off in the share on Friday, valuation is still not compelling enough to warrant an upgrade. But he does say that the Concur board made the right decision in supporting Singh. “Steve is an asset to Concur, and despite the momentary bad PR, we strongly believe the company, its shareholders, and its employees will be best served if Steve Singh remains the company’s CEO,” he writes.
- Caris & Co.’s Curtis Shauger Monday morning cut his rating on the stock to Average from Above Average, while reducing his price target to $21, from $25. He contends the disclosure issue “has and will continue to challenge the credibility of the company’s current management team,” and adds that “investors will struggle to pay up for a company whose growth and now management credibility are in question.” He adds that “a significant portion” of the company’s premium valuation has been due to quality of leadership; he said the disclosure issue is likely to raise some doubts about management which will impair its multiple.
Concur, which on Friday fell $4.17, or 18.4%, to $18.20, today is up 77 cents, or 4.2%, to $18.97.