On Thursday, Rosenblatt Securities adjusted its outlook on Sprinklr Inc (NYSE:CXM), reducing the price target to $14 from the previous $18, while still recommending a Buy rating for the company's shares. The decision comes after Sprinklr reported its first-quarter results for fiscal year 2025, which were considered lackluster.
Additionally, the company has decreased its revenue projections for the second quarter and the full year, citing a challenging economic environment, tightened budgets, and a transition in its go-to-market (GTM) strategy.
Sprinklr's revised revenue guidance for FY25, which fell below expectations by approximately 3%, was a key factor in the price target adjustment. Despite this, the company has increased its operating margin and per-forma earnings per share (PF EPS) forecasts. This has been partly attributed to a recent reduction of its workforce by 3%. The lower revenue outlook reflects a decrease in demand and challenges in customer renewals as they navigate budget constraints.
The analyst from Rosenblatt expressed confidence in Sprinklr's robust artificial intelligence architecture, which supports both Front Office and Contact Center as a Service (CCaaS) offerings. While acknowledging the current headwinds, including demand softness, capacity issues in CCaaS implementation, and changes in GTM leadership, the analyst believes that the company's revenue estimates for FY25 are now more conservative and less risky.
Looking ahead, as Sprinklr refines its GTM strategy, Rosenblatt anticipates a return to consistent revenue growth and an increase in stock valuation for the company. Despite the positive outlook, the firm has revised downward its revenue estimates for FY25 and FY26 in line with the company's updated guidance, leading to the new $14 price target.
In other recent news, Sprinklr Inc. has been the subject of several analyst adjustments following its weaker-than-expected first fiscal quarter. Wells Fargo reduced its price target for Sprinklr from $14.00 to $10.00, maintaining an Equal Weight rating due to concerns over the company's growth deceleration and execution challenges.
DA Davidson shifted its view from Buy to Neutral, adjusting the price target to $9, in response to Sprinklr's reduced FY2025 revenue outlook and retracted FY2027 financial goals.
Citi also adjusted its outlook, reducing its price target to $11 from the previous $13, while maintaining a Neutral rating, citing a decline in key performance metrics and a challenging demand environment. JPMorgan lowered the company's price target to $11.00 from the previous $16.00, while keeping an Overweight rating, despite disappointment with Sprinklr's performance and execution.
Cantor Fitzgerald downgraded Sprinklr's stock rating from Overweight to Neutral due to concerns about weakening demand and challenges in maintaining its premium pricing strategy.
These recent developments indicate a cautious stance from analysts regarding Sprinklr's near-term and long-term prospects. Despite these adjustments, Sprinklr reported a 13% increase in total revenue for its first fiscal quarter, reaching $196.0 million, and a 12% rise in subscription revenue to $177.4 million.
Amid these developments, Sprinklr has made notable executive moves, appointing Trac Pham as co-CEO, and Amitabh Misra, a former Vice President of Engineering at Adobe (NASDAQ:ADBE), as its new Chief Technology Officer.
InvestingPro Insights
Following the recent analyst adjustments and a cautious outlook on Sprinklr Inc (NYSE:CXM), a deeper dive into the company's financials and market performance using InvestingPro insights can provide additional context for investors. Sprinklr's market capitalization stands at $2.49 billion, reflecting the scale of the company within its industry. Despite a challenging economic landscape, the company has demonstrated resilience with an impressive gross profit margin of 75.5% over the last twelve months as of Q4 2024, indicating strong operational efficiency.
One of the noteworthy InvestingPro Tips for Sprinklr is that the company holds more cash than debt on its balance sheet, which could provide a cushion during economic downturns and allow for strategic investments. Additionally, the company has been trading at a low P/E ratio relative to near-term earnings growth, which could signal a potential undervaluation to some investors. However, it's important to note that 13 analysts have revised their earnings downwards for the upcoming period, which may have contributed to the conservative revenue estimates and the recent price target adjustments by various analysts.
Investors looking to delve further into Sprinklr's financials and market performance will find a wealth of additional insights on InvestingPro. There are over 10 additional InvestingPro Tips available, which can help in making a more informed decision. For those interested, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With these insights, investors can better assess the company's financial health and future prospects amid the current economic challenges.
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