CS First Boston Cuts Descartes to 'Buy'

But analyst Ralph Garcea still sees a potential turnaround for the software company

CS First Boston downgraded Descartes Systems (DSGX ) to buy from strong buy.

On Thursday the company posted preliminary $0.11 vs. $0.08 Q2 from operations. Analyst Ralph Garcea says the downgrade is based mainly on visibility issue with license fees. He says the company was not able to close some deals in Q2 and says while license fees are not the majority of the company's revenue, they usually drop right to bottom line. He thinks the license fee shortfall is a macro issue; he thinks the story will turn around quickly if economy turns, as purse strings will loosen.

Garcea cut the $0.38 fiscal 2002 (Jan.) EPS estimate to $0.10, and cut the $0.29 EPS to $0.47. He also cut the $32 target to $15.

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