Deutsche Bank downgraded Convergys (CVG) to hold from buy.
Analyst Brandt Sakakeeny says he is concerned that Sprint PCS (PCS), the company's second largest client in terms of 2002 revenues, intends to walk away from its outsourced billing relationship with CVG upon the contract's expiration on Dec. 31, 2004. He says the commentary in the company's latest 10-Q is materially different when referring to PCS. It notes PCS has until March, 2004 to notify CVG about renews.
Sakakeeny maintained his estimates. Although the stock has partially discounted the risk that PCS does not renew, the downgrade reflects remaining uncertainty of how much of an impact the loss of a major contract could have on the company's EPS.