Needham Cuts Commerce One to 'Hold'

Analyst says the stock price of the B2B e-commerce supplier is too high, following SAP AG's cash infusion on Friday

Needham cut Commerce One (CMRC ) to hold from buy.

On Friday, Commerce cut the Q2 guidance, and said SAP AG would pay up to $225 million for an increased stake in the company. Analyst Richard Davis says he was looking for Q2 revenues of $158 million vs. the company's new guidance of $100 million to $120 million. Therefore, he cut the $650 million 2001 revenue estimate to $485 million and cut the $816 million 2002 estimate to $519 million.

Davis says there's a possibility that SAP's cash infusion was a precursor to an acquisition and was most likely the impetus behind an uptick in Commerce One's shares on Friday. While he believes such a combination would be favorable to Commerce holders, he's not prepared to say a buyout is on the immediate horizon. He says at current levels, the stock is probably a third higher than what it should be.

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