Shares of Vocus Inc., which makes software for public relations management, fell Friday after an analyst downgrade the stock, saying its expansion plan is risky.
THE SPARK: RBC Capital Markets analyst Robert Breza downgraded Vocus to "Sector Perform" from "Outperform" in a Friday morning research note. He said the company's plan to expand its social-media monitoring capabilities and offer a more comprehensive marketing solution may require additional investment and acquisitions that could hold back earnings.
"Despite the expanded offering, Vocus will still be targeting a relatively small slice of the overall marketing pie and will be competing against some of the largest names in technology and media today," Breza wrote.
He reduced his price target on the stock to $25 from $33.
THE BIG PICTURE: Vocus is focused on small and medium-sized businesses, and Breza calls is a "later-cycle play," a company that sees results improving late in an economic recovery. That recovery "continues to be pushed out." He said he sees some signs of weakness in overall technology investment trends this year.
SHARE ACTION: Vocus shares fell $1.13, or 4.9 percent, to $22.04 in afternoon trading.