Analyst Downgrades BEA Systems in Wake of Oracle's Buyout Offer of $6.7B
NEW YORK - An analyst downgraded shares of BEA Systems Inc. late Sunday in the wake of Oracle Corp.'s unsolicited offer to buy the software maker for $6.7 billion.
Citi Investment Research analyst John Reilly Walsh downgraded BEA to "Hold/High Risk" from "Buy" after BEA rejected Oracle's $17-per-share offer as too low.
Walsh raised his price target to $20 from $15, saying that an
increased share price could attract another buyer or force Oracle to
raise its own offer.
The offer represents an 25 percent premium over BEA's closing price on Oct. 1, the day before the deal was made public.
"We
rate BEA Systems shares 'Hold / High Risk' as the stock is trading
above the $17 per share offer made by Oracle which we believe will act
as a floor in the shares, but we do not have enough upside to our new
$20 price target to warrant a 'Buy,'" Walsh said in a note to clients.
Jefferies & Company Inc. analyst Katherine Egbert agreed with Walsh, saying Oracle's bid is currently too low.
"We
would not be surprised to see Oracle up the bid, not based on
management influence but at the request of shareholders who have
already bid up BEA shares well above the offer price," she said in a
client note.
Egbert, however, maintained her "Buy" rating, but raised her price target to $17 from $16.
BEA
makes "middleware," products that help software applications run more
smoothly with databases, while Oracle makes business management and
database software.
Shares of BEA closed at $18.82 Friday.
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