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Downgrades Over Growth Concerns Push FreeMarkets Lower


FreeMarkets (FMKT) was down 7.9% in preopen Instinet trading on downgrades from Prudential and Goldman Sachs following third-quarter results from the business-to-business software maker.

Both Prudential and Goldman cited growth concerns caused by the economic slowdown, as Freemarkets reported adding only one new customer during the third quarter vs. 12 in the second quarter and 11 in the first quarter.

Goldman downgraded the stock to market performer from market outperformer and widened its 2001 loss estimate to 55 cents a share from 40 cents.

Prudential reduced the stock to hold from buy, citing valuation as an additional concern, but raised its price target to $19 based on 2002 revenue projections.

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The downgrades come a day after the company posted its third-quarter loss of 4 cents a share, beating analysts' estimates for a loss of 9 cents a share and narrowing its loss from the year-ago period's 33 cents a share.

Revenue rose to $40.6 million, up 53% from the same period last year.

The company said it now expects to become profitable in the fourth quarter, with earnings of 2 cents a share, a quarter earlier than its previous estimate.