Aladdin Knowledge Systems Ltd. (ALDN)

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CIBC likes Aladdin's story: repeats Outperform rating

25.1.06 | 12:07 By Sharon Shpurer

Most of the investment banks left their investment ratings for Aladdin Knowledge Systems (Nasdaq, TASE: ALDN) unchanged after the company published its fourth-quarter results. Nor did most change their price objectives for the data security company's stock.
CIBC didn't either: its recommendation remains Outperform and its 12-month price target is $21, which is roughly 20% above Aladdin's share price on Nasdaq.

The investment bank wrote that the upswing in the enterprise software security market brought Aladdin strong results in the last quarter of 2005. Altogether, CIBC continues to believe in the long-term story of Aladdin, the analysts say.

The analysts were undeterred by the weakness in Aladdin's core market of digital rights management (DRM) systems for enterprises. It's a hiccup, not a change, they say and remain bullish on the company's lead in that segment.

Aladdin stock from 2002

Meanwhile, Jefferies & Co were rather less impressed by Aladdin's fourth quarter. Its 12-month price target is $17 and the investment rating is Hold.

The investment bank decided to lower its 2006 forecasts from $95.9 million revenues to $94.1 million.

Jefferies & Co lowered its earnings projection from $1.14 to $1.12 per share, and cut its first-quarter 2006 sales forecast from $23 million to $22.7 million.

It is concerned about the significant slowdown in Aladdin's DRM operations. Given that, and the caution the management headed by Yanki Margalit evinced regarding its strategic collaboration with Cisco Vision, the analysts opted to be cautious about investment in the Israeli company.

Deutsche Bank shares Jefferies & Co's concerns and also elected for a Hold rating, though its 12-month price target is $18. One quarter does not a trend portend, the German bank says, but it does increase the risk factor regarding 2006.

http://www.haaretz.com/hasen/spages/674744.html

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