Jefferies Lowers Outlook As Uncertainty Surrounds Novell (NOVL)

Jefferies & Company, Inc. is out with a report, where it reiterates its “hold” rating on shares of Novell NOVL; it has set a price target between $4.00-$5.00 on the stock. Yesterday, Novell lowered its Q3 revenue and margin outlook on the back of customer uncertainty surrounding the future of the company. Given this uncertainty, the analysts at Jefferies noted, “we remain concerned over the company's deteriorating fundamentals and pace of customer defection.” Novell has lowered its Q3 guidnace and expects revenue of $197-199mm vs previous guidance of $205-210mm. NOVL also lowered its Q3 operating margin outlook to be in the range of 13%-15% down from previous guidance of ~15%. Jefferies writes, “We now adjust our 2010 revenue/pfEPS estimates to $806mm/26c from $815mm/27c. In addition, we are reducing our 2011 revenue/pfEPS to $802mm/25c from $811mm/26c.” NOVL began the day trading at $6.01 and is currently down 21 cents on the day.