Dutton Associates Announces Investment Opinion: American Software Strong Buy Rating In Update Coverage By Dutton Associates
2008-07-21 23:08:07 -
NOTE TO EDITORS: The following is an investment opinion issued
by Dutton Associates - Dutton Associates continues its coverage of American Software (Nasdaq: AMSWA) maintaining a Strong Buy rating and a $8 price target. The 11-page report by Dutton senior analyst David P. Soetebier,
CFA is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals.
American Software is a leading supplier of enterprise management software and services. Through 88%-owned Logility, Inc. (NASDAQ:LGTY) the Company has a strong market share position in the growing market for Supply Chain Management (SCM) software. We expect the demand for SCM software to become even stronger as major companies increasingly outsource production, driving the need to optimally manage their supply chains, since the long supply line amplifies mistakes. We believe that the poor relative price action in American Software reflects the sell-off in Logility shares, which are an important part of the total valuation of the Company. Logility targets small to mid-sized companies that may be more influenced by recent economic conditions than Fortune 500 type firms. We believe that the market has overreacted to the reported earnings shortfall at American Software. The outlook for all three of the Company's businesses (supply chain management, enterprise resource planning and information technology services) remains positive. In addition to its internal strengths, the Company's strong balance sheet allows it to take advantage of growth opportunities either internally or through acquisitions. Although the fourth quarter was below our estimate we have maintained our Strong Buy rating because of the favorable longer-term outlook. We expect earnings to rebound with an improvement in the U.S. economy. However, our 12-month price target was reduced from $8.40 to $8.00. The Company currently pays a cash dividend of $0.09 per share per quarter, which we consider safe.
About Dutton Associates
Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 senior analysts are primarily CFAs and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.
The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $74,000 from the Company for 11 Research Reports with coverage commencing on 1/03/2005. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.
Dutton Associates
John M. Dutton, President, 916-960-0623
