DemandTec shares sink as guidance disappoints

Shares of price-management software company DemandTec Inc. sold off a day after the company said its outlook for its fiscal first quarter was "more uncertain" and analysts cut their estimates on the stock.

Wedbush Morgan analyst Michael Nemeroff downgraded the San Carlos, Calif.-based company to "Hold" from Buy" on the weaker-than-expected guidance.

He also lowered his price target on the stock to $9.50 from $10, trimmed his revenue estimates for fiscal 2010 to $85.6 million from $92 million; and reduced his earnings-per-share estimate for 2010 to 14 cents from 15 cents.

"The company's organic growth rate could drop below 10 percent in the (first quarter)" and for the year, Nemeroff said, while competitors are growing revenue at higher rates.

On Thursday, the company reported a loss of 18 cents per share, or $5 million, for the 2009 fiscal year ended Feb. 28, compared with a loss of 25 cents per share, or $4.5 million, the prior year.

Excluding special charges, the company said it earned 15 cents per share.

Analysts polled by Thomson Reuters had expected a profit of 14 cents per share.

Annual revenue rose 22 percent to $75 million from $61.3 million in fiscal 2008.

The company also said that the revenue generated by its Connect3 acquisition in its fiscal first quarter would be between $3 million to $5 million rather than its earlier estimate of $4 million to $6 million.

The company also said it expects to earn between 8 cents and 16 cents per share, excluding special charges, for the 2010 year as macroeconomic conditions deteriorate, according to Raymond James analyst Terry Tillman. "Guidance disappointed," Tillman said, especially the lower-than-expected benefit from the Connect3 acquisition.

He kept an "Outperform" rating on the company's shares.

Analysts polled by Thomson Reuters had expected earnings-per-share of 16 cents for the year ending on Feb. 28, 2010.

Separately, Deutsche Bank reiterated its "Buy" target on the stock, but also trimmed earnings-per-share estimate to 11 cents from 15 cents, excluding any special charges.