JPMorgan Cazenove has downgraded Sage Group PLC’s (LON:SGE) rating to ‘neutral’ from ‘overweight’ and cut its price target to 670p from 830p following the software company’s profit warning issued on April 13.
In a note to clients, analysts at the US investment bank said that despite the FTSE 100-listed firm’s warning, they still believe in the medium-long term thesis and Sage’s ability to accelerate revenues, but they think that “confidence has been damaged.”
READ: Sage Group cuts annual revenue guidance after first half misses expectations
The analysts noted that Sage downgraded its full-year organic revenue growth to 7% from 8%, and its management was unable to provide much detail around the root causes of the issues, other than that there were delays with initial expectations in closing some of its largest enterprise deals.
They concluded: “Importantly, management wasn’t able to confirm the previously guided 2020 targets, and altered rhetoric from a from 2020 target, to a mid-term ‘rolling’ target, leaving the option to push back the 2020 targets.”
In late morning trading, Sage shares edged 0.5% higher to 601.4p.