PTC Stock Drops 20% in One Day After Warning
Yesterday PTC told Wall Street that its previous earning guidance was wrong, and revised estimates down $10 million for the quarter. Today Wall Street had a message for PTC, and as TheStreet.com put it, “Parametric Tanks on Warning.” PTC stock closed at 17.23, down 20.12 percent in one day.
In yesterday’s announcement, PTC (Nasdaq: PMTC) said it expects revenue for the fiscal 2007 third quarter ended June 30, 2007 to be approximately $225 million, compared with previous guidance of $235 million to $240 million. PTC said lower-than-expected license revenue totaling approximately $62 million was the primary driver of the third quarter results.
“Having met or exceeded our guidance for the past 15 consecutive quarters, I am disappointed that our revenue and earnings results will be below our expectations for the third quarter,” said C. Richard Harrison, president and chief executive officer. “Though third quarter total revenue grew approximately 4% year over year and was generally in line with our results from the second quarter, our license revenue fell short of our forecast in North America and Japan. In response to our revenue and earnings shortfall, and to support our commitment to deliver significant operating margin and earnings improvements in the future, we have already begun to implement several cost-reduction initiatives in the fourth quarter.”
PTC President Dick Harrison Wonders if he should have told Wall Street sooner about his sales forecast "oopsie."
Wall Street analysts who cover PTC were quick to offer their assessment. Typical was the word from Goldman Sachs analyst Sasa Zorovic who downgraded the stock to “Neutral” from “Buy,” reducing his price target to $20 from $24.
Those of us behind 3D CAD News have a different view. Nobody runs away when a grocery market has a sale; why should anybody run when a stock market has a sale? Today's 20% drop makes PTC a rather attractive buy to the shrewd investor (all two of them who read this blog).
CADCAMNet will provide more details and less snarky attitude in its next edition on July 12. PTC will report on earnings for the third quarter on July 25.
