Textura: 4 Reasons You Shouldn't Buy Into This Sell-off

NEW YORK (TheStreet) - Shares of Textura (TXTR), which sells cloud-based invoicing and other services to the construction industry, have dropped 14% this year following a Citron Research report accusing the company of fraud and misconduct.

Deerfield, Ill.-based Textura denied the allegations while several investment banks came to the company's aid with positive commentary. Nonetheless, Textura's stock still hasn't recovered.

So, should you listen to the banks and use the sell-off as a buying opportunity, or avoid the name altogether? To answer these questions, we'll dig deeper.

For Textura, Citron has a price target of $4, which is considerably below its current share price of $25.67 after dropping 3.2%. The again, Wall Street analysts have a consensus 'outperform' rating on the stock, according to data provided by Thomson Reuters. 

In its recent quarterly results for the first quarter of FY2014, Textura reported revenue growth of 77% to $12 million from the corresponding period a year ago. This point towards accelerated growth as Textura reported a 72% increase in revenues in the fourth quarter of FY2013. Moreover, for the current fiscal year, the company has forecast revenue growth of between 62% and 70%.

On the other hand, the business widened its losses as its net loss climbed from $6 million a year ago to $6.7 million. Nonetheless, the company did manage to beat the market's consensus estimate for both revenue and income.

The earnings beat comes just a month after Citron's initial report. As a bearish research firm, Citron has a mixed track record. Of the hundreds of reports over the past several years, Citron has given correct calls on some occasions - such as Intuitive Surgical (ISRG), but has been wrong about others -- e.g. its last year's bear case for 3D Systems (DDD).

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