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Pacific Keeps Overweight Rating on Click Commerce

Note: An earlier version of this story carried the headline: "Pacific Growth Cuts Estimates for Click Commerce" and deck: "Analyst Pat Mason notes some additional risk due to lack of transparency on acquisitions." This was changed because the analyst trimmed earnings estimates based on a higher share count.

Click Commerce (CKCM) posted 33 cents second-quarter non-GAAP earnings per share. Pacific Growth kept an overweight opinion on the stock.

Analyst Pat Mason says $13.3 million in revenue was above his estimate, and 33 cents EPS was in-line. He says 29.3% operating margin was below his 30.3% estimate due to lower license mix and greater R&D investments, offset by higher service margin and greater G&A efficiencies. He says with 3 acquisitions completed recently, the transition may undergo some disruption, but expects to see positive revenue synergies.

Mason raises revenue estimates, but cuts $1.39 2005 EPS estimate to $1.34, and $1.29 for 2006 to $1.24 due to higher shares outstanding. He says that he realizes there is some additional risk due to lack of transparency on acquisitions, but believes that if the company meets his new estimates in the third quarter of 2005 (revenue of $13.6 million and EPS of 34 cents), returns to a cash flow positive business after digesting Xelus, and begins to benefit from cross selling opportunities, he figures the stock could rise toward $31, or 25 times his new 2006 EPS estimate of $1.24.

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