SG Cowen Trims Aspen Tech Rating

Analyst Pawan Malhotra thinks the software company has hit a rough patch, and lacks a clear path to recovery

SG Cowen downgraded Aspen Technology (AZPN ) to buy from strong buy.

Analyst Pawan Malhotra says Q3 revenue guidance is 15% below his $89 million estimate, and license revenues account for the entire miss. He says the company is the latest victim of capital expenditure reductions and has had several large-deal deferrals in Q3. He notes management doesn't have any visibility on how long it will take before customers ready to commit.

Malhotra thinks Aspen's pipeline is clogged. However, he believes the company is best positioned to benefit from a further supply chain and e-business adoption in process industries when the economy recovers. He cut the $0.44 fiscal 2001 (June) EPS estimate to a $0.13 loss, and lowered the $0.60 fiscal 2002 EPS to $0.36 EPS.

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