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.