In its press release, Callidus forecast revenue of between $18 million and $19 million for its fiscal fourth quarter ending Dec. 31 and said GAAP operating expenses were expected to run between $9.9 million and $10.9 million for the period vs. $10 million in the third quarter.

Wedbush hinted that Callidus shares might be poised for a breakout once some of the execution risk subsides around the company's ongoing shift to a software-as-a-service model and away from concentrating on licenses, and it's able to deliver earnings on a regular basis.

"Our $7 target represents an EV/2011E Sales multiple of ~2.5x which is still well below other pure-play small-cap subscription vendor stocks with more consistent operating performance," the firm said, explaining that this is reflective of not only the business model transition but the current overall economic environment.

And yet, with the latest quarter's success coming sooner than expected, the firm thought so could a higher valuation.

" W e envision that the multiple investors are willing to pay could increase as the company continues to generate positive revenue and EPS growth," Wedbush said.

-- Written by Michael Baron in New York.

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