BEA Seen As Very Attractive Acquisition Candidate

Credit Suisse First Boston maintained a "neutral" rating on BEA Systems (nasdaq: BEAS - news - people ) with a $7 price target. CSFB raised the 2006 estimate to earnings of 39 cents per share on revenue of $1.15 billion, up from earnings of 37 cents on revenue of $1.11 billion."It appears first-quarter license revenue was higher than our forecast as a result of modestly stronger bookings and the consumption of additional backlog," the research firm said. CSFB also raised its second-quarter license revenue estimate, on an absolute basis, to $115 million form $110 million, towards the low end of guidance. "Implied license revenue guidance for the second quarter of $112 million to $124 million is clearly sending the signal that management believes the business has bottomed and growth is around the corner. The high end of the guidance range seems a bit aggressive and may be predicated on the contribution of a few large deals." The research outfit finds that surprising in light of performance over the last few quarters where license revenue growth has been flat to down on an annual basis. CSFB concluded that, "BEA represents a very attractive acquisition candidate given the strong customer base and robust maintenance revenue stream. The good news for the stock is that the data points for the next month should be fine and acquisition speculation continues to permeate the market."

[Forbes]