UPDATE: Benchmark Downgrades Guidance Software to Hold Following Q1 Results Miss

In a report published Friday, Benchmark Company analyst Mark W. Schappel downgraded the rating on Guidance Software

from Buy to Hold and lowered the price target from $13.00 to $9.00. In the report, Schappel noted, “Management attributed the Q1 revenue shortfall to a lack of urgency to get deals done in the commercial sector and to sequestration-related buying hesitancy in its federal government business. The company sees many of these same trends playing out during the rest of the year, and therefore doesn't expect Q2 to be a ‘snapback' quarter. We are downgrading our rating to Hold from Buy given the Q1 shortfall, near-term uncertainties in license sales and our expectations that Q2 isn't likely to be a rebound quarter. While we are still believers in the longer-term story (secular growth drivers in the eDiscovery, cybersecurity and regulatory compliance markets), we believe the absence of short-term growth catalysts will keep the stock in the penalty box for a quarter or two until the company demonstrates effective sales execution and solid uptake in its core products.” Guidance Software closed on Thursday at $10.02.