Legg Mason downgraded Micros Systems (MCRS ) to hold from buy.
Analyst Thomas Underwood says Micros, which supplies technology to the hospitality industry that includes touch-screen registers, reported good financial results. He says the company continues to sustain a strong balance sheet. He expects Micros to pay down its credit line over the next six months from cash generated from operations. He raised the $1.34 fiscal 2004 (June) earnings per share estimate to $1.50, and initiated a $1.90 fiscal 2005 earnings per share estimate.
Underwood notes shares trade at 25.1 times the fiscal 2004 earnings per share estimate; he thinks a recent run-up in the stock price is based more on momentum, and less on fundamentals. Therefore, due to recent stock price appreciation, he downgraded. Underwood has a $38 12-month target.