Sell Reiterated on Ness Tech

Tags: csc, nstc, ibm, hpq, acn, eds
29 Nov 9:12pm
Posted by ZacksResearch
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Zacks senior information technology analyst Steve Biggs, CFA has further reduced the six-month target price of the American Depositary Receipts (ADRs) of Israel-based computer services provider Ness Technologies (NSTC) while maintaining his Sell rating. Here are some of the reasons why:

'Ness Technologies is a small player in a challenging market for IT services. Outside the Israeli government market, the company faces intense competition from established players, such as Accenture Ltd. (ACN), IBM (IBM), Hewlett Packard (HPQ), Computer Sciences Corporation (CSC), Electronic Data Systems (EDS), and others.

'Given this thesis, we maintain a Sell rating on NSTC shares and lower our target price to $8.50. Ness Technologies shares are currently trading at a P/E of 9.2x our 2008 EPS estimate of $1.00, a significant discount to the industry. Although NSTC has grown at a rapid pace over the last few years based on its successful acquisition strategy, the company has posted inconsistent results, including Q207 and Q307, and we are concerned that backlog growth is slowing sequentially.

'As such, we have concerns that it may not meet 2008 expectations. We, therefore, maintain our Sell recommendation on the shares of NSTC and reduce our six-month target price to $8.50. Our target price represents a P/E multiple of 8.5x our adjusted earnings estimate of $1.00 for 2008.'

Read the full analyst report on NSTC.

Read the full analyst report on CSC.

Read the full analyst report on EDS.





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