Kenexa shares plunge on profit miss, tepid outlook

WAYNE, Pa. - Shares of Kenexa Corp., which makes Web-based recruitment and employee development tracking software, hit a new 52-week low on Tuesday as investors reacted to its Monday announcement that third-quarter earnings fell 23 percent and missed Wall Street's expectations.

Its tepid outlook for the fourth-quarter also led analysts to cut their price targets, and some to downgrade the stock.

Shares sank $2.09, or 23 percent, to $6.85, after hitting a new 52-week low of $6 earlier in the session. Its previous low was $7.16.

The company reported net income of $5.4 million, or 24 cents per share, compared with $7.1 million, or 27 cents per share, in the year-earlier quarter.

Revenue rose 15 percent to $54 million from $46.8 million a year earlier.

Analysts, on average, were expecting a profit of 35 cents per share on revenue of $54.6 million, according to a poll by Thomson Reuters.

For the fourth-quarter, the company expects earnings, excluding some items, of 22 cents to 25 cents per share. Analysts, who tend to exclude items from their estimates, predict an average profit of 37 cents per share.

In a client note Tuesday, Jefferies & Co. analyst Ross MacMillan cut the stock to "Hold" from "Buy," noting deteriorating margins and a troublesome outlook.

"We worry we are now in a spiral of cost cutting to reflect further deteriorating revenues," he wrote.

He suggests that the company's core business could continue to weaken as unemployment worsens.

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