UBS Warburg Lowers Macromedia to 'Hold'
UBS Warburg downgraded Macromedia to hold from buy.
Analyst Ben Reitzes says he downgraded primarily on valuation. He notes shares exceeded his $22 target, and are up almost 120% from October lows, at 60 times his $0.42 fiscal 2003 (March) EPS estimate. Factoring in risks associated with the current technology spending environment, he believes the $25-$27 range fairly represents Macromedia's potential to realize double-digit revenue growth and double-digit operating margins within 12-18 months, as it benefits from its dominant Flash and Dreamweaver franchises. He notes it still seems cash flow and operating margins have bottomed in the first quarer and revenues are 1Qto bottom in Q3. He set a $26 target.
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