On Thursday, Needham, a financial analysis firm, adjusted its price target for AudioCodes (NASDAQ: AUDC), a leading provider of advanced voice networking and media processing solutions. The new price target is set at $14.00, reduced from the previous $18.00, while the firm continues to recommend a Buy rating on the stock.
AudioCodes reported first-quarter 2024 results that did not meet the consensus expectations, falling at the lower end of their guidance. The company also revised its full-year 2024 outlook downward, citing the shift from license sales to a subscription model as a factor slowing growth.
Despite this, the company's Live subscription Annual Recurring Revenue (ARR) for Microsoft (NASDAQ:MSFT) Teams solutions saw a significant increase of 45% year-over-year. Additionally, total revenues from the Microsoft ecosystem grew by 8% year-over-year.
The company's Customer Experience (CX) revenues experienced a 15% year-over-year growth. However, sales of legacy gateway hardware continued to decline, with a 25% drop year-over-year in both service provider and enterprise segments. The decline in this area is expected to persist throughout the calendar year 2024.
In response to these business challenges, AudioCodes management has revised its guidance and announced a reduction in force (RIF) of an additional 6%. Needham has consequently lowered its financial estimates for AudioCodes for fiscal years 2024 and 2025. The price target has been adjusted to $14.00, reflecting an anticipated extended period of recovery for the company.
InvestingPro Insights
Following the recent performance review and revised outlook by AudioCodes (NASDAQ: AUDC), InvestingPro offers some key insights that could further inform investors' decisions. The company's management has shown confidence by aggressively buying back shares, a move that can signal belief in the company's value. Furthermore, analysts predict AudioCodes will be profitable this year, aligning with the company's positive annual recurring revenue trends within the Microsoft ecosystem.
InvestingPro Data highlights a market capitalization of $291.55 million, with a forward P/E ratio of 25.26, suggesting that the company's earnings could justify its current valuation over time. The dividend yield stands at 3.64%, offering investors a steady income stream despite recent price volatility, which has seen the stock price decline significantly over the last three months.
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