Compuware Corp. (Nasdaq: CPWR) rolled past analysts' estimates in its second quarter Monday, earning $108.8 million, or 28 cents a share, on sales of $568.1 million.
Its shares closed off 3 1/8, or 11 percent, to 24 1/2 ahead of the earnings report after Soundview Technology Group analyst Jim Mendelson cut the stock from a "buy" recommendation to a "hold."
First Call consensus pegged the software developer for a profit of 25 cents a share in the quarter.
The $568.1 million in sales represents a 55 percent improvement compared to the year-ago quarter when it earned 18 cents a share on sales of $366.6 million.
"We are pleased that this quarter's results confirm that Compuware's business remains solid and not dependent on any single technology phenomena,'' said CEO Peter Karmanos, Jr. in a prepared release. "Our inherent growth rate of 35-40 percent has the potential to continue accelerating and yielding incremental growth with larger absolute numbers."
Mendelson, who was unavailable for comment, went out on a limb by cutting the stock just hours before its quarterly earnings report.
Last quarter, Compuware beat Street estimates by 3 cents a share, earning $90.7 million, or 24 cents a share, on sales of $443 million.
John McPeake, an analyst at Prudential Securities, said the timing of the downgrade made no sense and predicted Compuware would beat the Street estimate this quarter.
"I have a strong buy on the stock and there's a good chance there might be an upside surprise above the Street number," McPeake said. "Cutting this stock today is certainly a way to make an impact."
Sixteen of the 18 analysts following the stock maintain either a "buy" or "strong buy" recommendation.
After peaking at 39 7/8 in December, the stock swooned to a low of 16 3/8 in April.