CyberSource Corp. shares were downgraded last week even though the payment processor's first-quarter results beat estimates.
Scott P. Sutherland of Wedbush Morgan Securities in Los Angeles said his downgrade to "hold" from "buy" was mainly about the stock price, which has doubled over the past year, to more than $10.
Mr. Sutherland said Thursday in a note that "until new opportunities, such as the relaunch of BidPay and an expanded relationship with Google, begin to generate returns we expect margins to suffer temporarily."
CyberSource bought BidPay.com Inc. from First Data Corp. for $1.8 million last month. First Data had shut down the unit in December, but CyberSource, a specialist in online card processing, said it planned to restart the business and enter the auction-payments business.
CyberSource reported Wednesday that its first-quarter earnings fell 14% from a year earlier, to $875,000. Excluding noncash items, earnings per share were 7 cents, topping the average estimate of six analysts by a couple of cents. Revenue rose 40%, to $15.6 million, topping the average estimate of $14.5 million.
CyberSource had warned in mid-February that its results would miss Wall Street's expectations.
It forecast a break-even second quarter and revenue of $16 million. For the it projects net income of $2.1 million to $2.8 million, or 6 cents to 8 cents a share, and revenue of $68 million to $69 million.
