Wachovia Downgrades Sapient
Wachovia downgrades Sapient Corp. (SAPE ) to underperform from market perform.
Analyst Edward Caso says the downgrade is based on valuation, given the recent rise in the share price, as well as the belief that its current business mix shift will dampen the benefit derived from an economic upturn. He thinks the ongoing shift of business to offshore development centers will dampen revenue growth for '02 and '03, as well as make it difficult for the company to return to double-digit EBITDA margins.
He expects EBITDA margin to remain meaningfully negative in '02, and for SAPE to burn cash to a level of $220 million at year-end ($1.74/share).
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