CIBC World Cuts Dendrite to 'Hold'

Analyst Ben Rooks thinks longer selling cycles and increased competition raise risks for the software provider

CIBC World downgraded its investment rating on Dendrite International (DRTE ) to hold from buy.

Analyst Ben Rooks says the company's prior guidance was 22%-25% revenue growth, while EPS consensus was $0.18. He says management attributes the shortfall to delays in securing a written contract associated with add-on work being completed for an existing client.

Rooks says the weakening economy, lengthening sales cycles and more competition increases the risk for future quarters. He cut the $0.94 2001 EPS estimate to $0.55, and trimmed the $1.25 2002 estimate to $0.83. He expects management's credibility to require the rest of year to mend, and says would-be buyers should wait until the stock's price drops below $8.

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