Excellent mgmt

But Goldmacher argues that many of these companies' offerings aren't essential and could be pushed out or slashed due to tight budgets. The group includes human-resource outfit Kenexa (KNXA), online expense- software maker Concur Technologies (CNQR), public-relations software developer Vocus (VOCS), and online business-optimization concern Omniture (OMTR).

saas

Kenexa (KNXA) was downgraded from Outperform to Market Perform, JMP Securities said. Stock pulled back after-hours and its growth potential may be less attractive in the current environment.

Upgraded by Needham & Co from Hold to Buy

Upgraded by Jefferies & Co from Hold to Buy

Rating: BUY
Target: $40
Sector: Technology

We expect Kenexa to continue to benefit from the solid demand for human capital management applications, especially since unemployment shows no signs of easing. The company is poised to deliver 30-35% YoY organic revenue growth and 70% YoY total revenue growth due to market
strength, continued market share gains, growth from international expansion and cross-sales into existing clients. Our revenue estimates could likely see additional upside from accretive acquisitions, though we believe the company could wait until 2H07 before another major transaction. We further believe our projection for 2007 operating margin of 20.5% (below the target
range of 22-24%) could see upside. With the shares trading at 27x our 2007 EPS estimate, representing a 2007 PEG of 0.8x, we consider the valuation attractive and we reiterate our Buy rating.