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CTG’s fourth-quarter surge is mitigated by current outlook

Computer Task Group finished last year on a roll, with profits that easily topped analyst forecasts, but the Buffalo information technology company warned Tuesday that this year will be much tougher.

While CTG’s fourth-quarter profits more than doubled, the company’s sales fell by 14 percent and were weaker than analysts expected.

The company warned that its profits this year are likely to be about half of what they were last year, with a further sales decline of around 5 percent. That caused CTG’s stock, which already is at a nearly seven-year low, to fall even further Tuesday. The share price closed down by 12.3 percent, or 70 cents, to $4.99.

CEO Cliff Bleustein blamed CTG’s subdued outlook for 2016 on factors ranging from slowing global trade, a strong dollar that makes U.S. exports more expensive and changes in the health care sector that have led customers to cut back on information technology projects, including electronic medical records systems.

“We closed the year facing a number of head winds,” Bluestein said. “We expect 2016 to be a challenging year.”

CTG’s fourth-quarter profits more than doubled, to $2.6 million, or 16 cents per share, compared with $1.2 million, or 8 cents per share, a year earlier. The earnings were 4 cents better than analysts were expecting.

But CTG’s sales fell to $84.2 million, from $98.3 million, less than the $88.4 million that analysts expected, as two of the company’s biggest IT staffing customers used fewer CTG consultants and the company’s electronic medical records work continued to decline.

CTG said that it expects its profits this year to fall by 15 to 25 cents per share, which would be far less than the 41 cents that it earned during 2015 and less than the 49 cents that analysts were expecting. CTG said its revenues are expected to fall to between $340 million and $360 million, compared with $370 million last year. Analysts had forecast $381 million in sales.

In the current quarter, CTG said, its profits would be between 3 and 5 cents per share, less than the 11 cents that analysts forecast. Sales are expected to range between $86 million and $88 million, which is about 11 percent less than a year ago and below the $92.7 million that analysts were expecting.