Barclays downgraded RPX (NASDAQ: RPXC) from Overweight to Equal-weight on the back of weak guidance, despite the earnings beat.
Barclays said, “RPXC reported 2Q14 EPS of $0.24 (above both our and the consensus estimate of $0.22). The 2c beat vs. our estimates in the quarter was equally driven by better-than-expected top-line growth and expense management. Overall, we believe that 2Q results were both clean and strong.”
As for reasoning for the downgrade, Barclays analysts wrote, “We see increased uncertainty around subscription growth. While we are impressed by the company's sustained 90%+ renewal rate, we note that more conservative assumptions with respect to expense growth at rates similar to '14 levels and reduced fee income would result in 2015 EPS of $1.02, well below consensus. As a result, we are downgrading the stock to EW from OW and taking our target price to $17 (~15xFY15 EPS) from $20.”
RPX traded recently at $15.19, down two percent.
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