The quarter was as good as anyone could reasonably expect. They clearly are taking share. Based on the sales differential and guidance with BVSN, ARTG, and even IWOV, VIGN could be in position to cherry pick the comp's best sales reps. I hope they are.
The guidance, though down slightly, was conservative. For the first time in 3 quarters, I got the sense there is a reasonable chance for significant upside to the guidance, especially for the 4th quarter.
VIGN has eliminated the multiple spread with IWOV. As noted previously, a few weeks ago IWOV had a 40% premium to VIGN basde on P/S. Though I would have liked the spread to narrow via IWOV price holding flat and VIGN up more substantially, the market is confirming the relative competitive strengthening of VIGN.
An objective view of VIGN based on the quarter would be summed up as "improving but not out of the woods yet." They are executing but can't let up on execution. I would have liked to have seen more progress on operating margin. I do not have the same confidence in Joel Katz as with Tom Hogan. They could use the same strength of hand in their CFO as they do with their COO. I don't think they have that based on their history with expense controls, with all due respect to Katz.
With the group multiple contracting, realistically, (as much as I hate to think it) I don't think anyone should expect much more than 10 within the next couple of months. I would not be surprised to see a 7-9 trading range with some possible quick, short spikes to the upside - at least until they report next time.
It would seem to be tough of an environment sentiment wise to expect a break out without their beating consensus on both top line license growth and bottom line by a surprising magnitude.
Still, if you own VIGN, you have to be comforted by their direction in this very difficult enterprise software market. Lets get a seasonally weak Europe behind us in the Q3 and another 3 months of the effects of the 6 rate cuts wending their way through the US economy and see where we stand in October in terms of guidance. |
