Cognos Inc.'s (COGN) shares stumbled as much as 5% Friday, despite the software maker's better-than-expected fiscal 2007 fourth quarter results.
“We believe this share price weakness will be short-lived,” Raymond James analyst Steven Li said in a note to clients, adding the market needs time to digest the strong fourth quarter numbers as well as “inline” guidance the company provided related to its 2008 first quarter.
He reiterated his 'strong buy' rating on the stock and maintained his US$49 price target for the company. He also modestly raised his EPS estimates from US$2.03 to US$2.05.
Analyst Robert Dennison of UBS left his 'buy' recommendation on the stock and his price target of US$50 unchanged, saying Cognos 8, the company's flagship product continues its momentum and contributed significantly to fourth quarter revenues, which increased 12% year-over-year to US$284.5 million.
He also expressed concern about the company's first quarter guidance, especially its EPS forecast of US28 cents – 33 cents, which he considers “disappointing."
Merrill Lynch analyst Edward Maguire noted that, although Cognos' fiscal 2008 expectations may be conservative given its competitive positioning, he anticipates a seasonally slower fiscal first quarter and says margin concerns going forward will result in modest appreciation of the company's share price.