Why Sapient Shares Plunged

Is this meaningful, or just another movement?

Evan Niu
Evan Niu, CFA
Feb 13, 2013 at 3:52PM
Technology and Telecom

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 Sapient (UNKNOWN:SAPE.DL) have plunged today by as much as 13% after the company reported earnings.

So what: Service revenue in the quarter came in at $293.2 million, which resulted in non-GAAP earnings per share of $0.20. Both top- and bottom-line results were ahead of analyst estimates, but they clearly weren't good enough for investors. CEO Alan Herrick said the company faced a challenging economic environment last year.

Now what: Guidance for the first quarter calls for service revenue in the ballpark of $295 million to $300 million, with adjusted operating margin of 9.2% to 10.2%. Full-year sales are predicted to be up 10% or more for 2013. Sapient has received at least three analyst downgrades today following the results, including from Citigroup, William Blair, and First Analysis, all of which now have neutral ratings on the stock.

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