Broker snap: Sage hit by Bank of America downgrade

11th Mar 2013 10:48

Accountancy software giant Sage suffered a steep fall on Monday after Bank of America Merrill Lynch downgraded its rating for the stock from 'neutral' to 'underperform'.The broker said in a research note that investors should remain cautious as to whether Sage can pull off its move to cloud computing."Going forward the key driver for the stock will be the company's ability to launch and gain traction with its new cloud solutions in key geographies."This, in our view, is a slow process, and the market should remain sceptical over the next few quarters given that historically very few companies have managed to transform themselves from on-premise vendors to credible cloud players."Nevertheless, the broker has lifted its target price for the shares from 320p to 330p.The stock was down 3.33% at 337.77p by 10:46 on Monday.BC