TIBCO Software Inc. (NASDAQ: TIBX) was one of the top draws from the 24/7 Wall St. top analyst upgrades and downgrades on Wednesday. The company’s earnings report brought about a serious disappointment is a serious earnings disappointment, but there may be a silver lining involved here. Many analysts downgraded the stock, but some analysts maintained their positive ratings and merely lowered their price targets.
To show just how much of a save this was, the stock was trading at $17.80 when we covered it on Wednesday morning. By the open of trading, it was back at $18.25 and only hit a low of $18.20. By the close, the stock was up to $19.66 – closing down only 5.5%. This sounds like a bad loss, but consider that shares were down 15% before the commentary and trading reaction came into play.
We would point out that some of the old TIBCO buyout rumors may have helped save the day mentally for some traders and investors as well. We have not heard any such chatter in quite some time, so do not assume that this is a new round of rumors being floated. It is far from it.
Again, there were downgrades. TIBCO was downgraded to Hold at Stifel, downgraded to Neutral at Mizuho Securities, downgraded to Neutral at Hillyard Lyons, and also downgraded to Market Perform by JMP. Still, Deutsche Bank maintained its Hold rating.
Pacific Crest maintained its Buy rating, defending the stock even as it cut the target price to $24 from $28 in the call.
RBC Capital Markets also maintained its Outperform rating even if it cut the price target to $23.
Susquehanna maintained its Positive rating but cut the price target down to $24 from $27.
We would warn readers that the former $25.30 consensus analyst price target is no longer accurate after all of these downgrades and price targets were cut.
Another consideration is that the stock traded over 18 million shares. That represents about 7-times to 8-times normal trading volume. The reality is that traders and investors save stocks rather than analysts saving stocks, but sometimes those analyst calls are what give those traders and investors the confidence to go against the grain.
This is such a large recovery from the lows of the day that this should almost be considered a win. Almost, but not quite.
One last consideration here – TIBCO is in a space in software where there has been much consolidation over the last ten to fifteen years. TIBCO has even been a rumored buyout target, with Hewlett-Packard and SAP having both been previous suitors in the rumor mill. Some investors may be hoping that such a drop creates some buyout interest. As with all hopes of a buyout, we would only encourage for investors to look at companies where they like the long-term fundamentals rather than hoping for an out of the blue buyout offer.
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