Scient Corp. (Nasdaq: SCNT) tumbled 14 percent Monday after Banc of America downgraded the stock on concern some of its troubled 'dot-com' clients may not be able to pay up.
Analyst James Janesky lowered his rating on the electronic commerce consulting services and technology provider to "market performer" from "buy," citing questions of accounts receivable collections.
Shares were down 6 3/8 to 40 11/16 following the news.
Last week Scient customer Inacom Corp. (NYSE: ICO), a provider of information technology outsourcing services, filed for Chapter 11 bankruptcy.
"With the recent struggles of many 'dot-com' companies to show any signs of a path to profitability, or the ability to remain a going concern, there is further uncertainty surrounding Scient's accounts receivable base," Janesky wrote in a research note.
Janesky added that in the near-term, uncertainty surrounding the visibility of ultimately collecting any portion of the outstanding accounts receivable, whether this portion turns out to be large or small, will put pressure on the stock. He expects the pressure to continue until this issue is resolved and the market is comfortable that Scient has worked through its "riskier" A/R balances.
For the long-term, the key operating metrics of the company remain positive, and the June quarter is expected to meet or exceed Banc of America's estimates on revenues and earnings per share, Janesky added. The company also topped estimates in its most recent quarter.
The company's competitors include Anderson Consulting, Sapient (Nasdaq: SAPE), down 2 11/16 to 98 5/16,iXL (Nasdaq: IIXL),down 13/16 to 16 11/16 and Viant (Nasdaq: VIAN), down 2 15/16 to 27 1/16.