Manugistics Group Inc., the fast-growing, Rockville-based maker of manufacturing software, saw its stock plunge 16 percent yesterday even before surprising analysts by saying the company expects a loss for its latest quarter.
Executives expect that "revenues and earnings for the first quarter will not meet security analysts' expectations and will result in an operating loss," the company said in a prepared statement that was released after the stock market closed. Stock analysts had predicted earnings per share of between 11 cents and 14 cents for the quarter, so the warning represented a big change from what investors had assumed.
Manugistics stock plunged $8.875 per share to close at $47.875, after BT Alex. Brown analyst Christopher Mortenson warned earlier in the day that Manugistics might not make expectations for the quarter ending May 31.
In the same report, Mortenson reaffirmed his "strong buy" rating on Manugistics stock and called this quarter's setback a "one-time event." But Wall Street focused on the bad news.
Manugistics, maker of software used to plan manufacturing and transportation, was expected to earn 12 cents a share in the quarter, the average estimate of nine analysts surveyed by IBES International Inc.
Manugistics officials didn't return phone calls seeking comment.
Although an operating loss is expected for the quarter, "it is still lTC too early to accurately estimate final results for the first quarter," the company's statement said.
Mortenson's opinion is influential because BT Alex. Brown underwrote Manugistics public offerings in 1993 and 1997, and the brokerage firm is among the leading traders of Manugistics shares.
Manugistics shares surged 40 percent in March after the company reported better-than-expected fiscal fourth-quarter earnings of $6.69 million, or 25 cents a diluted share, as revenue almost doubled to $62.1 million.
Even with yesterday's declines, the company's shares trade at more than 56 times estimated fiscal 1999 earnings of 88 cents a share. That's double the price/earnings ratio of the Standard & Poor's 500 index.
Manugistics could face mounting competition from German software giant SAP AG, which has announced plans to get into production-planning.
Mortenson said yesterday that the company is winning larger contracts that take longer to close, leading him to lower his confidence in its ability to meet current estimates.
Pub Date: 5/22/98