The Globe and Mail reports in its Wednesday edition that Scotia Capital analyst Divya Goyal has downgraded Softchoice to "sector perform" from "sector outperform." The Globe's David Leeder writes in the Eye On Equities column that Ms. Goyal is sticking with her $20 share target. Analysts on average target the shares at $21.57. Ms. Goyal says in a note: "Despite weaker-than-anticipated gross sales, the company reported year-over-year gross profit growth of almost $2.5-million, or 3.3 per cent, and year-over-year adj. EBITDA growth of $7.5-million, or 49 per cent, using operating leverage in the business) and cost-optimization efforts. Although Softchoice's cost-containment efforts have been effective over the past few quarters despite top-line weakness, profitability growth may not be sustainable over the longer term if the top line continues to weaken. Additionally, sustained weakness in the services and hardware businesses could impact the company's overall profitability given that software and cloud generated only a 13.5-per-cent gross profit margin against gross sales as compared with the hardware and services segments which generated 17 per cent and 28-per-cent gross profit as a percentage of gross sales."