Ariba: Roth Downgrades To Hold On Valuation Basis; Shrs Fall

Roth Capital analyst Nathan Schneiderman this morning cut his rating on Ariba (ARBA) to Hold from Buy on a valuation basis.

He notes that the stock has been a “massive outperformer” this year, rising more than 40%, making it “by far the best-performing name in our entire enterprise-software universe.” Given the run in the stock, he concludes the shares “no longer” offer a compelling risk-reward proposition.

The analyst notes that the stock trading a “very healthy” valuation multiples, of nearly 4x revenue, 16x free cash flow and 20x P/E on 2011 estimates profits. “We are nervous paying these kind of multiples for a company growing its top line only an estimated 4% this year and 8% next year,” he writes.

He keeps his $17 target on the stock.

ARBA this morning is down 63 cents, or 3.6%, to $17.11.