Sanford Bernstein threw cold water on

Siebel Systems'

(SEBL)

second-half rally, saying that the business software vendor isn't likely to grow much in the near future and downgrading it to market perform from outperform.

The bearish note by analyst Charles Di Bona pushed the stock down by nearly 5% at one point, but shares rallied a bit and in recent trading were off 38 cents, or 3.6%, to $10.06.

Di Bona said Wall Street overreacted to the company's

poor second-quarter performance , but earnings expectations are now more reasonable, and perhaps a bit aggressive. Indeed, the stock rallied after its beating in the spring, and since early August, it has appreciated by about 44%.

"Siebel's relative forward multiples are consistent with historical levels and remain at a premium to

its peers, so there seems to be little justification to expect material multiple expansion," Di Bona said.

He also noted that expectations of a takeover are built into the stock, but "competitive and technological challenges make it a generally unattractive acquisition candidate and do not see a compelling fit with any of the likely buyers."

Di Bona added that his downgrade isn't based on worries over the soon-to-be-reported fourth quarter, but over longer-term issues, including competition at the high end from German software giant

SAP

(SAP) - Get Report

and at the low end from

Salesforce.com

(CRM) - Get Report

.

(Bernstein does not have an investment banking business.)