J.P. Morgan Cuts Manhattan Associates to 'Underweight'

Analyst Adam Holt thinks the technology company's license revenue may have dropped 19% in the third quarter. He'd wait for a return to organic growth

J.P. Morgan downgraded Manhattan Associates (MANH ) to underweight.

Analyst Adam Holt says the 20 cents (adjusted) earnings per share missed his Street-low 21 cents earnings per share estimate. He notes for the second time in three quarters, the company missed license forecasts; management suggested 15 deals fell out in the third quarter. Holt says absent the impact of Logistics.com and Return Central, he thinks license revenue may have dropped 19%.

Holt says Manhattan Assocciates hasn't seen any sign of economic improvement, and has experienced weakness in Europe. He says the company also continues to struggle with pipeline management, especially for larger deals, and organic growth is sequentially flat. He thinks Manhattan Associates will underperform its peers until there's a return to organic growth.

Holt cut the 23 cents fourth-quarter earnings per share estimate to 21 cents, and sees 91 cents earnings per share in 2004.

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