Critical Path Falls on Downgrade

Critical Path, Inc. (Nasdaq: CPTH)fell 3 9/16 to 21 7/16 Tuesday after Banc of America Securities downgradedthe stock to buy from strong buy, saying they were taking a “slightly morecautious outlook on valuation and visibility.”

“Several factors, when taken together, lead us to adopt a less bullish standon the shares in the near term,” the Banc of America analysts wrote. The firm also reduced its 12-month price target for CriticalPath shares to 42 from 85.

The news was not all bad, however. “We still look for very strong fourthquarter results, and would not be surprised to see as much as 10 percentrevenue upside, consistent with the company’s results in previous quartersthis year,” Banc of America said.

Critical Path, a San Francisco, California-based provider ofbusiness-to-business Internet messaging services, posted a loss beforecharges of US$8.7 million, or 14 cents per share, compared with a loss of $6.2million, or 17 cents, in the same period a year earlier.

Revenue, at $45million, was 815 percent ahead of the year-earlier quarter.

The company expects fourth-quarter revenue to be between $54 million and $56million, with pro forma earnings of a penny per share. For 2001, CriticalPath projects $300 million to $310 million in revenue, and pro formaearnings of 39 to 41 cents per share.

“We anticipate continued high demand for our product and service offerings,”chief executive officer Doug Hickey said in announcing the projectionsearlier this month.

Company shares have fallen sharply in recent months, and are well belowtheir 52-week high of 119 1/2.

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