RBC Capital Ups BEA Systems to Outperform

Analyst Robert Brezav notes license revenue growth and improving operating margins

RBC Capital upgraded BEA Systems (BEAS) to outperform from sector perform, after the company posted quarterly results.

BEA Systems siad it has 12 cents vs. 9 cents first quarter earnings per share (EPS.)

Analyst Robert Breza says BEA's license revenue of $132.4 million came out above his $131 million estimate, representing 14% year over year growth. He says this strength is attributed to AquaLogic biz, which contributed to over 10% of license revenue, included in 9 of 17 $1 million deals. He notes days sales outstanding (DSOs) of 68 days improved to 70 from a year ago, while deferred revenue of $365 million grew 18% year over year. He believes BEA is now beginning to demonstrate the operating margin leverage investors have been waiting for. With license revenue growing year over year for the past four quarters and improving operating margins, he upgrades and raises his $14 stock price target to $15.

Before it's here, it's on the Bloomberg Terminal.