StreetSweeper Sees 'Significant' Downside In KEYW

Shares of KEYW Holding Corp. (NASDAQ: KEYW) faces significant downside risk, according to a report on StreetSweeper."An embarrassing acquisition and declining gross margins are among the issues poised to kill the stock price of KEYW," the report said.Maryland –based KEYW Holding provides cyber security solutions to the U.S. government. The company operates through Government Solutions and Commercial Cyber Solutions segments. Shares of KEYW were up 15 percent this year."Indeed, while a rally is temporarily holding up the share price for the holding company, massive challenges have set up prime conditions for a dive. These hazards are tied to the company's failed attempt to jump from a declining government contract business into the cyber security business and back out again," the report added.Late February, RBC Capital Markets' Robert Stallard downgraded the rating for KEYW Holding Corp. to Sector Perform from Outperform, while reducing the price target from $11 to $7.Analyst Robert Stallard mentioned that though the planned divestiture of the company's Hexis business will shift the focus to the more profitable government IT segment, it will also remove the growth and takeout premiums generally enjoyed by start-up commercial technology businesses.Read more: http://www.benzinga.com/analyst-ratings/analyst-color/16/02/6747095/rbc-downgrades-keyw-holding#ixzz41rDUsYQtStreetSweeper's report noted that with both the impending divestiture of Hexis and PureFunds' quarterly portfolio rebalancing right around the corner, KEYW is likely in trouble. PureFunds, which holds 4.5 percent of KEYW, may well sell all or at least a massive amount of KEYW stock once the company boots its cyber security business."That poses a screaming threat of stock dilution for today's investors," the report added.KEYW shares were up 1 percent at $6.86. They were trading between $3.91 and $12.59 during the past 52-weeks.