Sapient (Nasdaq: SAPE) met analyst estimates in the third quarter, reporting third quarter net income of $16.1 million, or 12 cents per share. Early analyst reaction, on the rating of the e-services consultant is mixed.
In early trading Friday, shares were down 0.06 to 31.00.
In the quarter, the company saw both year-over-year and sequential growth in revenue, posting a total of $138.1 million.
Despite the good numbers, concerns were raised about a possible drop in near–term revenue in what management described as a “difficult time” ahead.
Analysts' reactions were mixed.
On the positive side, WR Hambrecht reiterated its “strong buy” rating, saying that possible revenue shortfalls are offset by Sapient’s strong market position and excellent execution.
CS First Boston was not as optimistic. It cut the company’s rating to “buy” from “strong buy”.
CS First Boston analyst Mark Wolfenberger also downgraded a whole batch of information technology services companies to "buy" from "strong buy" including Razorfish Inc. (Nasdaq:RAZF), eLoyalty Corp. (Nasdaq:ELOY) and MarchFirst Inc. (Nasdaq: MRCH).
"With the Web services results in, analysis indicates a worsening environment," Wolfenberger wrote in a research note. "When the customer spends time mulling technology options, Web integrators suffer first. We believe Q4 could be rough as well, even on lowered expectations and guidance."
He added that his "buy" rating indicates that consolidation is under way in earnest, and Sapient and the other names downgraded today "will possibly be some of the first to return to favour as the period of indecision abates and investor interest returns."
Reuters contributed to this report.