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National Instruments stock gets a downgrade

By Dan Zehr | Wednesday, January 30, 2008, 12:52 PM

National Instruments Corp. shares tumbled today on an analyst’s downgrade and the company’s cautious outlook for the first half of 2008 pulled down the stock.

Citi Investment Research analyst Terence Whalen dropped the shares to “sell” from “hold,” saying the tight link between National Instruments’ fortunes and global industrial spending would hurt the company as the U.S. economy slows. The Austin company reported earnings Thursday that missed Wall Street’s estimates, and its executives scaled back forecasts for the current quarter.

Its shares are “likely to see choppy trading conditions over the next several quarters,” Whalen wrote in a note to clients. He lowered his target price to $24 from $41.

Despite the expected slowdown in sales growth, National Instruments executives said Tuesday they would push forward with plans to expand their technical sales force globally. The highly trained salespeople work with fewer customers, but customers that buy higher-end, more technical and more expensive systems.

The expanding sales force will be key in National Instruments push into the higher-end graphical system design and embedded systems the company’s research and development staff has produced over the past five years. Those newer products have fueled sales over the past 18 months, and they take the company into markets that don’t rely as heavily on the ups and downs of the economy and purchasing managers index, which tracks industrial spending.

National Instruments shares closed Wednesday at $26.23, down $2.72 or more than 9 percent. It’s the stock’s lowest closing price since April 13, 2007.

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