First Albany downgrades Blue Coat Systems (BCSI) to neutral from buy.
Analyst Scott Zeller says since his Apr. 1 launch of coverage of Blue Coat Systems, there's been a material change to legal challenges facing the company, which he feels has raised the risk profile of shares.
He notes, on Apr. 7, the informal SEC investigation that was under way as of Apr. 1 was upgraded from informal to formal status. Also, the scope expanded to include employees inside Blue Coat Systems, including management.
Zeller notes, since Apr. 7, there's been a lock-down of communication between the company and investment community which creates uncertainty. Therefore, he suggests moving to the sidelines.