Stock Preacher

Art Technology Group Inc. (NASDAQ: ARTG)

Art Technology Group Inc. (ARTG) is a premier provider of cross-channel software and services to more than 900 of the world’s leading brands.  The Company markets its B2C and B2B e-commerce, cross-channel commerce, commerce service, managed application hosting services, as well as commerce optimization products and services to mid-sized and enterprise-sized businesses.

Found in 1991, the Company is headquartered in Cambridge, Massachusetts.

Source: Reuters.com, SEC Filings.

Financial Summary

Analyst Consensus

Seven analysts polled by Thomson Reuters rate shares of ARTG a “Buy.”

Analyst Recommendations and Revisions

Source: Reuters.com

Investment Highlights

The Company’s software solutions minimize the complexity and expense of launching an advanced e-commerce site with little to no business disruption and in as little as three months.   The implementation and ongoing operation of the e-commerce site is handled by the Company’s partners, which affords the customer higher conversion rates, larger order values and increased repeat orders.

Trends in the Company’s Business

Impact of Weak Economy

The Company warns in its latest 10-Q that the global recession has led to delays, reductions and eliminations of capital spending budget plans across a broad range of potential customers, especially in the luxury retailer market.  The potential duration and severity of the poor macro-economic conditions is unknown and difficult to forecast with any certainty.  The Company intends to assume the worst and has implemented stringent expense controls, hiring constraints and discretionary spending on a quarter-to-quarter basis.

Trend in E-commerce Sales

E-commerce sales trends are a critical factor in the Company’s business, and are the foundation for the demand for the Company’s products and services.  The trend toward online sales and service is growing in importance among all sectors, as online business and revenue growth provides many benefits such as increased revenue, considerable operations savings and inventory control when compared with traditional brick-and-mortar businesses.

E-commerce Upgrading

The Company’s upgrading business has grown as initial platforms installed by the Company require a new look or increased functionality.  Management estimates that platforms are overhauled every four to five years, with an outlook for continued growth under the economic circumstances are unknown at this time.  However, the Company is cautiously optimistic that the most recent trend in this source of revenue will continue and may be an attractive solution to businesses scaling back major capital intense projects in favor of small but higher rate of return capital expenditure upgrades.

Overseas Expansion

Foreign revenue, as a percentage of total revenue, reached 27% and 30% for the latest quarter and first half ended June 30, respectively.   The Company seeks opportunities overseas and has entered into a partnership agreement abroad with an undisclosed company.  The Company expects growing opportunities internationally in the longer term.

Virtualization

Management noted in the Company’s latest 10-Q that it is concerned with the trend toward virtualization, which, if grown more quickly, would require the Company to deploy alternative pricing strategies.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui?s=artg

ARTG trades below its 13-day moving average. This bearish sign is more significant because the 13-day moving average is trending down as well.

The MACD for ARTG currently indicates a bullish signal.  The MACD is, however, below the signal line, a 9-day moving average.  The MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.  Overall, the chart is bearish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

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