UPDATE: Stifel Downgrades Model N to Hold, Removes PT Following Company Financial Update

In a report published Tuesday, Stifel analyst Tom Roderick downgraded the rating on Model N MODN from Buy to Hold, and removed the $25.00 price target. In the report, Stifel noted, “After the close on Monday, Model N issued an 8-K and corresponding press release providing a financial update ahead of the company's 180 day lock-up expiration. The company's updated guidance, calling for a revenue range of $20-21mn in F1Q14 (Stifel at $26.5mn) and $70-80mn in FY14 (Stifel at $114mn; Street at $118mn) is nothing short of mind-boggling, in our opinion. While the company had already called out sales execution issues on its F3Q13 earnings call while ousting former SVP of Global Sales Lawrence Whittle, the magnitude of the FY14 shortfall is nonetheless exceedingly difficult to explain, particularly as it was issued with three weeks left in the quarter. The company did not clearly articulate a plan to cut expenses in light of the $40mn+ revenue shortfall at the mid-point of the range. As more questions were raised than were answered on the update call, we are reducing our rating on shares of MODN to Hold from Buy.” Model N closed on Monday at $14.73.