On Thursday, Baird made an adjustment to its outlook for Sprout Social Inc . (NASDAQ: NASDAQ:SPT), reducing the price target on the company's shares to $38.00 from the previous $45.00. Despite the price target change, the firm maintained its Neutral rating on the stock.
The decision to lower the price target was influenced by the heightened activity among a new wave of investors, particularly those interested in Growth at a Reasonable Price (GARP) investing strategies, who are drawn to the company's growth narrative. This trend was noted as particularly pronounced in recent discussions, as well as at a conference held in early June.
Baird's analyst pointed out that the interest in small-cap equities like Sprout Social is a normal part of the investment cycle. However, the firm anticipates that the stock will likely trade within a certain range leading up to the release of its second-quarter earnings in early August. The current investor caution is attributed to concerns regarding the fiscal year 2024 estimates.
The firm also mentioned that it plans to reassess its stance on Sprout Social following a visit to the company's headquarters in August. This visit is intended to provide further insights that may influence Baird's perspective on the stock's valuation and future performance.
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