More Compuware Transformation

Compuware (CPWR - Analyst Report) reported revenues of $338.9 million in the fiscal fourth quarter, up 8.2% from a year ago and up 9.6% sequentially. The revenue growth was broadbased. In particular, software license fees grew 37.6% year over year to $100.8 million and were up 26.9% sequentially. The company incurred a restructuring charge of $1.9 million or $0.00 per share.

CPWR continues to transform its business and expects that restructuring activities undertaken in fiscal 2008 will reduce operating costs by approimately $100 million on an annualized basis. Going forward, management expects to generate a revenue growth of 5%-10% in fiscal 2009 while EPS is estimated to grow 20%-30% compared to fiscal 2008.

Shares of Compuware are currently trading at 15.5 times our 2009 EPS estimate of $0.66. Based on valuation and expected revenue growth in FY2009, we have increased our target price to $10, which is 15.2X our 2009 EPS estimate. Our target multiple is below the median P/E multiple of Compuware's closest peers.

Read the full analyst report on CPWR