Informatica drops on analyst downgrade

NEW YORK (AP) -- Informatica shares lost more than 5 percent Friday as a Nomura analyst downgraded the software company because the risk versus the reward is not as compelling as it used to be.

THE SPARK: Analyst Rick Sherlund lowered Informatica Corp. to "Neutral" from "Buy." He kept a $40 price target.

THE ANALYSIS: Sherlund said in a client note that Informatica is up 38 percent over the last six months and, even though there's no evidence of soft demand as the first quarter draws to a close, there's less incentive to buy the stock now.

The analyst said that the infrastructure software sector is also dealing with a slowdown in U.S. capital spending and the recession in Europe. While industry conditions are difficult, Informatica has been spending more money on research and development and CEO Sohaib Abbasi said in January that cloud computing and other changes in technology are "promising new opportunities."

SHARE ACTION: Informatica, based in Redwood City, Calif., fell $1.82, or 5.1 percent, to $34.04 in morning trading. The stock has traded between $23.83 and $54.49 over the last 52 weeks. For the year to date, the shares are up 18 percent.