On Friday, Piper Sandler adjusted its price target for Five9, Inc (NASDAQ:FIVN) shares, a cloud contact center software company, from $58.00 to $47.00, while maintaining an Overweight rating on the stock.
The revision follows a reduction in the company's fiscal year 2024 guidance to an 11% year-over-year growth rate, a steeper decline than the 12-14% anticipated by most investors.
The company's updated guidance indicates a departure from the usual seasonal growth trends previously observed in Five9's performance.
This change is attributed to fewer-than-expected new business opportunities in June, and a strategic decision by management to make a significant revision to guidance at once and then proceed forward.
Despite the lowered guidance, Five9's management expressed confidence in an eventual acceleration of business growth. In the meantime, they are scaling back on spending.
The current discussion among investors is likely to pivot towards the potential guidance for 2025 in the upcoming quarter, considering whether the company's cost structure is appropriate relative to its growth rate.
Piper Sandler's report acknowledges the company's openness and continues to see the benefits of artificial intelligence in the Contact Center as a Service (CCaaS) market. The price target adjustment to $47.00 is based on a free cash flow valuation in light of the company's present growth trajectory.
InvestingPro Insights
As Five9, Inc (NASDAQ:FIVN) navigates a period of recalibrated expectations, the latest InvestingPro data sheds light on the company's financial health and market performance. With a market capitalization of $3.14 billion and a revenue growth of 15.29% in the last twelve months as of Q1 2024, Five9 demonstrates resilience despite recent challenges. Notably, the company's liquid assets surpass its short-term obligations, providing some financial flexibility in the current economic climate.
InvestingPro Tips highlight that analysts predict Five9 will be profitable this year, which could align with management's confidence in business acceleration. Additionally, the company's moderate level of debt is a positive sign of its financial management. However, it's worth noting that the stock has experienced a significant decline over the last six months, and currently trades at a high Price/Book multiple of 6.49. Investors may find these metrics particularly relevant as they consider Five9's future in the competitive CCaaS market.
For a deeper dive into Five9's financials and additional analytical insights, InvestingPro offers a total of 9 tips, including an analysis of the company's profitability and return on investment over the last decade. Visit https://www.investing.com/pro/FIVN for a comprehensive look at Five9's investment profile.
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