Have THQ (THQI) shares gotten too cheap?

That’s the underlying question in a research note this morning from Citigroup’s Brent Thill. On the surface, he hardly sounds positive. Thill maintains a Hold rating, and cut his price target to $3 from $5.50. He also trimmed his EPS estimate for the March 2010 fiscal year to 29 cents, from 39 cents. Thill notes as well that there is “little buzz” at this point about THQ’s pending launch of the games Red Faction and Darksiders. But he says there is good buzz building for its upcoming UFC game, and that its game, Warhammer 40,000: Dawn of War II, is selling well.

Meanwhile, Thill writes that the company’s studio restructuring realigns costs without cutting into its “top development muscle.”

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Citigroup’s Brent Thill today chopped estimates and/or target prices on 11 of the 22 software companies he covers to reflect–you guessed it–the softening macro economy. Thill writes in a research note this morning that he expects negative Street revisions across the group over the next few quarters. The analyst reports that checks on current demand in the enterprise software sector “are not encouraging.” He writes “a full budget flush this year sounds less likely, and visibility is diminishing.” Thill is not that concerned about Q3 results, but he does worry about Q4 guidance–and the possibility of “a more pronounced” Q1 slowdown.

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Salesforce.com (CRM) shares are trading lower after Citigroup’s Brent Thill this morning cut his rating on the stock to Hold from Buy on a valuation basis.

Thill notes that he sees no cracks in the company’s fundamentals, and that the stock has held up well given the weakening economy and difficult equity market. He says CRM shares have benefited from continued “beat and raise” quarters and a potential mergers-and-acquisition premium. But he says that a near-term takeout is unlikely, and that “signs of caution could pressure the stock.”

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