UPDATE: J.P. Morgan Downgrades Model N to Neutral, Lowers PT Following 3Q13 Earnings Call

In a report published Tuesday, J.P. Morgan analyst Sterling Auty downgraded the rating on Model N MODN from Overweight to Neutral, and lowered the price target from $25.00 to $11.00. In the report, J.P. Morgan noted, “On the 3Q13 earnings call, management highlighted that they were changing the Head of Sales, and that big deal closings would be necessary to maintain 18-20% growth in FY14. Unfortunately, progress on those large deals has not materialized, and the resources needed to close them have tapped the opportunity to bolster smaller deal opportunities. This has an exaggerated impact on revenue in this percentage completion business model. We believe the long-term opportunity in the segment is still there, but the company will likely go through a couple of quarters of correcting sales execution before we begin to see the benefit. As a result we are lowering the rating to Neutral and cutting the price target to $11.” Model N closed on Monday at $14.73.