Underperform - Price 11.19 on Aug. 26
by Wedbush Morgan

Convergys provides outsourced customer care, human resource, and billing services worldwide. Until we see improvements in [human-resource management] and information-management segment, we are maintaining our Underperform rating and 9.50 target [which is] based on our [discounted-cash-flow] analysis and represents a 7.6 times price/earnings multiple to our 2010 non-GAAP EPS estimate of $1.24. This is a moderate premium to our estimated long-term EPS growth of 5%. Market cap: $1.4 billion.

employer

Hometown favorite

Jana Partners raised its position to 12.7 million shares (10.4%), by buying 506,504 from Aug. 6 to 8 at an average price of $13.23. Last month, Jana said that it hoped to engage in "constructive dialogues" with the company, in the hope of boosting shareholder value.

Jana Partners converted its filing status to activist investor, from passive. The hedge fund said it already has had "constructive dialogues" with executives of the human-resources systems provider on ways to improve shareholder value. Following Convergys' second-quarter earnings report, which included lowered '08 guidance, Jana determined "to reserve its right to take steps to bring about changes to increase shareholder value, which may include changes in the board composition, strategy and future plans of the company, as well as the pursuit of other plans or proposals." Jana holds about 12.2 million shares (9.9%).

Convergys (CVG) was upgraded to Buy rating from Neutral at UBS. Price target and FY 2008 eps estimates hold at $23 and $1.21, respectively.

Upgraded by BMO Capital Markets from Underperform to Market Perform

Downgraded by Friedman Billings from Outperform to Market Perform

Upgraded by Wedbush Morgan from Sell to Hold

Risk it will lose some Sprint business.