Piper Jaffray Lowers Price Target on RightNow Technologies (RNOW)

Piper Jaffray is out with a research report this morning, where it reiterates its neutral rating on RightNow Technologies RNOW; it also lowered its price target to $16.00, from $18.00. The PJ analysts cited the company’s most recent earnings report, where it reported strong recurring revenue growth of 27%; the company also addressed concerns about public sector spending trends heading into the third quarter, saying that “the pipeline is holding up.” The analysts reiterated five positives for the stock: 1) “Revenue and EPS were slightly above consensus 2) Raised guidance for recurring revenue y/y growth for the full year by 200bps 3) Reaffirmed guidance for operating margin by 4Q:11 to reach 18% to 22%, driven mainly by growth in recurring revenue 4) OCF grew by about 93% y/y to $4M and was above consensus of 3.7M 5) RightNow indicated that its Social technology (HiveLive) is red hot and that Siebel call center replacements are fueling healthy deal flow.” They also outlines five negatives for RNOW: 1) “Billings grew 14%, as did Annual Contract Value against a fairly easy comparison, and we think the company is capable of faster growth based on its technology lead 2) Current Gross Deferred Revenue was sequentially flat in Q2, versus sequential growth in prior years 3) Professional Services margin dropped by around 380bps sequentially 4) ASPs declined y/y by around 4% to $95M 5) Customer count remains at 1,900, consistent with the level of the prior 8 quarters, reflecting an equal balance of new customer additions and defections.”