Ariba: JMP Sees Trouble in Services Business; Cuts Estimates

Ariba (ARBA) shares are coming under pressure today following a cautionary note on the company this morning from JMP Securities analyst Patrick Walravens.

Walravens today repeated his Market Outperform rating on the stock, but cut his price target to $15 from $18. He also cut his EPS estimate for the September 2009 fiscal year to 61 cents from 70 cents; for FY 2010 he goes to 83 cents, from 91 cents.

“While we continue to believe that Ariba’s software solutions should fare relatively well in this macroeconomic environment, the services business may not hold up as well as we had previously believed,” he writes. Walravens notes that the company had guided to December quarter services revenue of $32 million to $34 million; roughly 40 percent of that relates to systems implementation. He notes that product upgrades are discretionary “and could easily be delayed by cautious customers.”

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