UBS Warburg today downgraded AudioCodes (Nasdaq: AUDC), a maker of voice over Internet systems, to “Neutral 2” from “Buy 2,” saying it had low confidence in the company’s guidance for this year.
At the same time, the investment bank raised its price target to $3.80 from $3, citing multiples for other companies in the industry.
Analyst Jonathan Half increased his revenue forecasts, on the back of the company’s acquisition of Nortel Networks’ Universal Audio Server (UAS) product. The 2003 revenue forecast was raised to $42.5 million from $39.6 million, and the 2004 forecast to $55.2 million from $51.4 million.
“In fact we decreased our revenue forecasts for AudioCodes’ business excluding UAS. We are maintaining our $0.24 loss per share estimate for 2003 and increasing our 2004 loss estimate by $0.01 to a $0.10 loss,” the analyst said.
According to Half, AudioCodes management stated in a conference call yesterday that business in March was weaker than expected, and that only the strong start to 2003 enabled the company to meet its targets.
“The company attributes the weakness to a slowdown in business activity due to the war in Iraq. According to management, business in the month of April returned to normal levels. However, the company has acknowledged that its business in the Far East, which accounted for 35% of revenues, is being impacted by the SARS outbreak,” Half said.
“We estimate that a continued spread of the disease could result in AudioCodes missing its current targets. Accordingly, we have reduced our revenue estimate for AudioCodes core business; however, given the acquisition of UAS, we are increasing our total estimated revenues,” he added.
AudioCodes shares closed on Nasdaq Tuesday at $3.41.
Published by Globes [online] - www.globes.co.il - on 30 April, 2003