The US bank cut its stance on Micro Focus to ‘sell’ from ‘neutral’ while raising its target price to 1,700p from 1,230p as it believes the stock has run ahead of fundamentals.
READ: Micro Focus continues to expect moderation in revenue decline from continuing business in current year
In a note to clients, Citi analysts said that over the mid-term, they see downside risks to revenue forecasts and margins for Micro Focus relative to market expectations.
They added: "The multiple appears modestly higher now, despite a more tempered outlook for the top line, and incrementally diminished visibility around the EBITDA improvement target."
For Sage Group, Citi cut its rating to ‘neutral’ from ‘buy’ while raising its target price to 720p from 630p.
In late morning trading, Micro Focus shares were 3% lower at 2,005p, while Sage shares lost 1% at 710p on the FTSE 100 index.