Kenexa Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of HR software provider Kenexa (Nasdaq: KNXA  ) fell more than 11% in early trading after an analyst at Longbow Research downgraded the stock from buy to neutral.

So what: Longbow analyst Steve Koening expressed concerns that weak economic growth will put a lid on hiring and thereby any gains in Kenexa’s share price, Barron’s reports. Fools have equally mixed feelings, giving the stock three out of five stars in Motley Fool CAPS.

Now what: I can appreciate Longbow’s skepticism. Not only are macroeconomic conditions uncertain, the market for human resources software is crowded with online alternatives such as SuccessFactors (Nasdaq: SFSF  ) and Taleo (Nasdaq: TLEO  ) . There doesn’t seem to be enough competitive advantage to justify Kenexa’s 35 price-to-earnings multiple.

Interested in more info on Kenexa? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn’t own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader.

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  • Report this Comment On June 07, 2011, at 9:32 AM, l2pceo wrote:

    Tim, is SuccessFactors about to be acquired?

  • Report this Comment On June 08, 2011, at 5:54 PM, TMFMileHigh wrote:

    @l2pceo,

    >>is SuccessFactors about to be acquired?

    I've no idea. I'm also not sure who would buy. Oracle? SAP?

    Sorry I can't be of more help,

    Tim (TMFMileHigh and @milehighfool on Twitter)

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