Merrill Downgrades Eclipsys to Sell

Analyst David Risinger doesn't think the healthcare software company is making money with its new subscription-based model

Merrill Lynch downgraded Eclipsys (ECLP ) to near term reduce/sell from buy, and long term neutral from buy.

Analyst David Risinger says he believes the company's transition to a subscription-based revenue recognition business model has yielded no financial visibility given the extreme magnitude of a shortfall this quarter (prior guidance was $0.11-$0.13 earnings per share). He had previously downgraded Eclipse in April when it disclosed a big drop in its VOC sales pipeline.

Risinger says he's also concerned that the company had rounded its sales funnel estimates to the nearest $100 million vs. rounding to the nearest $1 million in prior quarters. He cut the $0.55 2002 EPS estimate to $0.32, and trimmed the $0.67 2003 estimate to $0.55.

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