Merrill downgrades Mercury to intermediate-term Accumulate

Stock has reached high end of its historical valuation range, says analyst
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Merrill Lynch said on Wednesday it was cutting its intermediate recommendation for Israeli software testing maker Mercury Interactive (Nasdaq:MERQ) from Buy to Accumulate as the stock has reached the "high end of its historical valuation range".

Mercury's stock has gained almost 50% since the firm announced third quarter results two weeks ago and was "approaching a price level where aggressive upsides moves are likely to be limited", analyst David Parker wrote in a report.

Merrill Lynch said, however, it would retain its long-term Buy recommendation for Mercury since the company remained "an attractive long-term vehicle for investing in enterprise software trends".

Mercury reported a fall of 38% on the third quarter of last year in earnings per share of $0.11 in results released on Tuesday. Sales rose six% to $84 million from last year.

Mercury's Nasdaq-traded shares closed on Tuesday at $27.46, above its year-low of $18 but well below its year-high of $147.