Adams Harkness Ups Kronos to 'Buy'

Analyst Charles Trafton says core products and upgrade cycles remain strong, despite tight IT budgets

Adams Harkness upgraded Kronos (KRON ) to buy.

Analyst Charles Trafton says the maker of employee management software sees second quarter results at the high end of the previously provided guidance of $93 million to $96 million revenues, and 30 cents to 35 cents earnings per share. He says despite tight IT budgets, and war notwithstanding, it appears that core products and upgrade cycles remain strong.

Trafton thinks strong second quarter results reflect strength across the board, not any single or a few large deals. He also thinks strong revenue and earnings per share gains will be backed by solid cash flows and a liquid balance sheet. He sees 32 cents earnings per share on $93 million in revenue for the second quarter, and $1.62 earnings per share on $384 million revenue for fiscal 2003 (Sept.)

Trafton set a $47 target, which puts shares trading at 28 times his calendar 2003 earnings per share.

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