On Monday, Mizuho Securities adjusted its outlook on LivePerson (NASDAQ:LPSN), a provider of conversational commerce solutions, by reducing its price target to $0.50 from the previous $2.00 while retaining a Neutral stance on the company's stock.
The revision follows LivePerson's first-quarter earnings report, which was released earlier in the week and showcased revenue figures surpassing the high end of the company's own forecasts.
LivePerson reported first-quarter revenues of $85.1 million, outperforming both the company's guidance range of $79 million to $83 million and the consensus estimate of $80.6 million. Additionally, the company's adjusted EBITDA margin was positive at 0.5%, a noteworthy improvement over the anticipated -1.3%. Despite these results, the company did not alter its full-year guidance.
The firm's analysis indicates that 2024 may present challenges for LivePerson as it navigates through what is expected to be a transition year. Concerns have been raised regarding customer retention, which has cast doubt on the long-term appeal of LivePerson's offerings.
Adjustments were made to the fiscal year 2025 revenue estimates, now set at $307.7 million, a slight decrease from the previous expectation of $308.4 million. The forecast for adjusted EBITDA margin was also revised, increasing marginally to 6.7% from 6.6%.
The lowered price target of $0.50 is based on a valuation multiple of 1.5 times enterprise value to next twelve months' revenue, according to Mizuho Securities. This adjustment reflects the firm's cautious outlook on the stock amidst LivePerson's ongoing transition and retention challenges.
InvestingPro Insights
As LivePerson (NASDAQ:LPSN) faces a critical transition period, the latest data from InvestingPro sheds light on the company's current financial health and market performance. Despite surpassing revenue expectations in the first quarter, LivePerson operates with a significant debt burden and is quickly burning through cash, as highlighted by two key InvestingPro Tips. Analysts have also revised their earnings downwards for the upcoming period, reflecting concerns about the company's future profitability.
InvestingPro Data indicates a market capitalization of $50.81 million, with a negative P/E ratio of -0.395, suggesting that investors are wary of the company's earnings potential. The revenue decline of -22.91% over the last twelve months, coupled with a gross profit margin of 65.96%, paints a picture of the challenges LivePerson faces. Moreover, the stock price has experienced significant volatility, with a -86.76% return over the past year, indicating a lack of investor confidence.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that provide further insights into LivePerson's financial position and market performance. To make the most of these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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