UPDATE: Bank of America Downgrades FleetMatics Group PLC to Neutral, Reiterates $40 PT After a Deep Dive

In a report published Thursday, Bank of America analyst Nikolay Beliov downgraded the rating on

from Buy to Neutral, but reiterated the $40.00 price target. In the report, Bank of America noted, “We are downgrading FleetMatic's (FLTX) shares while maintaining our price objective (PO) following our deep dive in the story. FLTX has outperformed the NASDAQ by 2.3% since Nov. 1 and majority of SaaS stocks since the peak in SaaS valuations in March. With margins within the long-term operating model proving the business model, the key issue for the stock is sustainable revenue growth, in our view. Revenue growth is decelerating (+38% y/y in 2012, +39% in 2013, +31% in 2014E, +25% in 2015E). Market penetration according to our proprietary analysis is at 20%-34% vs company commentary of 10-12%. Regional expansion and the field service market provide revenue levers, but execution is as yet unproven, following the planned departure of the head of sales. The business is healthy, and we estimate the sustainable revenue growth is likely in the low to mid-20s% y/y post 2015. This caps valuation at around $40/share, in our view, based on our analysis of free cash flow generation capacity.” FleetMatics Group PLC closed on Wednesday at $38.75.