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Analysts see difficult road ahead
Analysts appear to agree that Legato's new policies, including the changing of its revenue recognition policy to avoid future problems, may eventually spark a turnaround in the stock.
The new policies should head off future problems, said a research note from Sarah Mattson of Dain Rauscher Wessels. However, the company has apparently lost one-fourth of its 400-person sales organization and even though it has replaced them, Mattson believes it will take three to six months to train the new hires.
The competitive environment also remains "fierce," said Mattson, who maintained her "neutral" rating on the company's stock.
Jordan Klein of UBS Warburg believes Legato's "strong suit" is in its technology, but "expected low productivity and operating efficiency should limit the company's success in the short-term," the analyst said in a research note.
Klein, who reiterated his "hold" rating and $15 target price on the stock, expects that Legato "faces serious challenges ahead" and that while a turnaround is not imminent, it is possible in late 2000 to early 2001. |
