Analyst cuts rating on Ariba to ‘Hold,’ weighing stock jump against slower revenue growth

By AP
Monday, June 28, 2010

Analyst cuts Ariba to ‘Hold,’ cites valuation

SEATTLE — Spending-management software maker Ariba Inc.’s shares have gained 40 percent this year, causing one analyst to cut his rating on the stock.

THE OPINION: Roth Capital Partners analyst Nathan Schneiderman reduced his rating on Ariba to “Hold” from “Buy.” In a research note Monday, Schneiderman wrote that the company’s stock is trading at “VERY healthy valuation multiples,” by some measures putting it in line with such powerhouses as Salesforce.com Inc. At the same time, revenue is growing only an estimated 4 percent pace this year and 8 percent next.

“It’s challenging to argue that the name is cheap given these multiples,” he wrote, adding, “To be clear, we remain very comfortable with our financial model for Ariba.”

THE STOCK: Shares of Ariba fell 65 cents, or 3.7 percent, to $17.09 in afternoon trading.

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