First Albany cut its investment recommendation on Digital River (DRIV ) to neutral from buy, after the company announced forward guidance that fell short of estimates.
Analyst Jason Avilio cited uncertainty regarding Microsoft (MSFT )'s strategy in the antivirus market, and ultimately how Microsoft's pricing/distribution will impact Digital River's partners. He says he's still somewhat skeptical regarding the Microsoft "doomsday" scenario. But given the company's 25%+ exposure to the antivirus market, as well as its management's cautious tone and outlook, he thinks Digital River's stock will be range-bound until investors have more visibility into Microsoft's strategy. He cut his $1.40 2005 pro forma earnings per share estimate to $1.24, and his $1.65 2006 estimate to $1.44.