This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Tech Stocks to Avoid, According to Jefferies

Stocks in this article: PTI BLKB NSR SYNA CIEN

BOSTON ( TheStreet) -- Technology stocks tumbled yesterday. The Nasdaq fell 0.8% and F5 Networks (FFIV) plummeted 22%, highlighting the danger of momentum stocks.

Investment bank Jefferies issued warnings on five technology stocks in its 2011 outlook. The firm said the shares may be trading above their intrinsic fair value. It expects two of them to stagnate and three to drop precipitously in the year ahead. Below, they are ordered by downside potential, from modest to most.

5. Patni Computer Systems (PTI) provides IT services, including application development, maintenance and support, from India. It targets industries, including insurance, manufacturing, retail and utilities, with custom offerings.

In the past 12 months, Patni's sales have risen 4%, but net income has soared 41% amid superior pricing. Third-quarter sales rose 6.9%, but profit tumbled 19% to $29 million. Earnings per share dropped 22%, hurt by a larger float. The gross margin narrowed from 41% to 38%. The operating margin fell from 18% to 16%.

Patni's stock appears undervalued, costing 10-times trailing earnings, 13-times forward earnings and 9.4-times cash flow, 49%, 27% and 42% industry discounts. But, Jefferies expects a cap on upside. It rates the stock "hold" with a $21 target, suggesting little, if any, upside in 2011. Goldman Sachs is more pessimistic, ranking Patni "sell" and predicting a drop of 18% to $17. In total, two researchers advise purchasing the stock, five say to hold it and one recommends selling. Of note: Patni boasts a net liquidity position (cash minus debt) of nearly $318 million.

1 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs