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Tibco Software (TIBX) Initiated As 'Outperform' By FBN Securities; PT $35

 September 27, 2012 11:21 AM

(By Balachander) Tibco Software Inc. (NASDAQ: TIBX) shares were initiated with an "Outperform" rating and price target of $35 by FBN Securities analyst Shebly Seyrafi.

The analyst thinks that shares of TIBCO are particularly attractive.

Last quarter, it had 30 percent-plus license bookings growth, and Seyrafi thinks that in FY 2013 license growth will be over 20 percent, roughly double that of services growth, and margins will improve accordingly.

The analyst said TIBX is a leading player in middleware (vs. IBM) and is growing its analytics segment (Spotfire) quite well.

[Related -Futures Point To Higher Open; Oracle Corporation (ORCL) Tumbles]

Last quarter's strong growth in Spotfire, and large (>$500M) pipeline were quite impressive and more than countered concerns about slowing SOA and BPM growth, Seyrafi said.

Seyrafi models strong license revenue acceleration in FY 2013. Channel checks indicate that Spotfire (20 percent of revenue) is very strong in analytics and is more enterprise-ready than competing solutions such as those from QLIK and Tableau.

"They indicate that about five months ago, TIBX began more aggressive co-marketing efforts in the channel, and this is now starting to resonate," the analyst wrote. 

Seyrafi said TIBX is an attractive target, management is confident about its business, and it is executing well. Concerns include relatively high exposure to the financials segment (23 percent of revenue) and Europe (32 percent of revenue), possible near-term disruption from the recent dismissal of TIBX's head of the Americas, and relatively high deal ASPs ($676K on deals > $100K).

[Related -Tibco Software Inc. (TIBX) Buys Real-Time Analytics Firm StreamBase Systems]

Shares gained 1.71 percent to trade at $29.82 on Thursday. The stock has been trading in the 52-week range of $20.04 to $34.67.

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