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SDL downgraded by Jefferies

01 February 2016 14:40

Jefferies has downgraded its recommendation on technology group SDL (LON:SDL) to hold from buy, stating that investors need to reassess the appropriate valuation multiple that should be attached to a language-centric strategy and revenue mix versus that associated with enterprise web technologies and optimisation.

The broker said: "Our downgrade to Hold from Buy on SDL is not seeking to suggest that the operational review is leading the company in the wrong direction. On the contrary, narrowing the focus to a more manageable strategy centred on aspects where SDL has genuine scale and competitive advantage, i.e. language, has to be seen as credible."

"One key area of investment within the language technology business is machine translation. While this has been a costly endeavour, we have been persuaded of the strategic nature of this platform and the benefits of retaining in-house machine translation capabilities," it added.

Analysts have cut their price target to 430 pence per share from 510 pence.

At 2:40pm: (LON:SDL) SDL PLC share price was +0.75p at 451.75p

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