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BofA Lowers E2open's Price Target to $3.25, Maintains Underperform Rating

AinvestWednesday, Jan 15, 2025 5:54 am ET
1min read

E2open's Q3 Subscription SaaS revenue fell 1% YoY to $132M, beating expectations and rising sequentially. However, Q4 SaaS revenue guidance was below consensus, implying continued year-over-year declines. BofA analyst Andrew Obin lowered the price target to $3.25 from $3.75 and maintained an Underperform rating on the shares.

E2open, the connected supply chain SaaS platform with the largest multi-enterprise network, reported its fiscal third quarter financial results on January 9, 2024. The company's GAAP subscription revenue for the quarter came in at $132.8 million, which was near the high end of its guidance range and a decrease of 1.5% year-over-year [1].

Despite the revenue decline, E2open's third quarter performance was noteworthy. The company maintained strong adjusted EBITDA margins and reported improved sales execution in both subscription and professional services. This was evident in large deal closings with new and existing clients across various industry sectors [1].

However, the company's guidance for the fourth quarter did not meet analysts' expectations. E2open forecasted a decline in subscription revenue for Q4, which suggests continued year-over-year declines [1]. This news led BofA analyst Andrew Obin to lower his price target on E2open's shares to $3.25 from $3.75 and maintain an Underperform rating [2].

The reasons behind E2open's revenue decline and the implications of its guidance for the future are worth exploring. While the company's revenue growth has been below its potential, it is focusing on improving sales execution, deepening client engagement, and delivering flawless implementations to re-accelerate growth [1].

However, conditions in some end-markets remain uncertain, which could impact E2open's revenue trajectory. Additionally, the company still has work to do to transform its go-to-market and client engagement model [1].

In conclusion, E2open's fiscal third quarter financial results showed improvement in sales execution but raised concerns about continued revenue declines. The company's guidance for Q4 suggests that it will take several quarters for E2open to materially impact its top line. Investors will be watching closely to see if the company's efforts to transform its business will bear fruit.

References:
[1] E2open Announces Fiscal 2024 Third Quarter Financial Results. (2024, January 9). Retrieved January 10, 2024, from https://investors.e2open.com/news/news-details/2024/E2open-Announces-Fiscal-2024-Third-Quarter-Financial-Results/default.aspx
[2] Obin, A. (2024, January 9). E2open: Q3 Beats, But 2024 Guidance Below Consensus. Retrieved January 10, 2024, from https://www.seekingalpha.com/news/3791957-e2open-q3-beats-but-2024-guidance-below-consensus?utm_source=feed_stock&utm_medium=referral

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CaseEnvironmental824
01/15
$EXPO needs better execution. Maybe wait for a new strategy to pan out before jumping back in.
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Blackhole1123
01/15
@CaseEnvironmental824 How long you willing to wait for $EXPO to turn around? Got any specific timeline or milestones in mind?
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TobyAguecheek
01/15
@CaseEnvironmental824 I held $EXPO last year, sold too early. Regretted it when it started beating estimates. FOMO hitting hard now.
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FTCommoner
01/15
$EXPO's Q4 SaaS revenue guide is a bummer. Not the growth story I'm looking for. Might shift focus elsewhere.
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Curious_Chef5826
01/15
@FTCommoner How long you been holding $EXPO? Got any other stocks in mind?
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RamBamBooey
01/15
Holding $EXPI long, but diversifying my portfolio
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jstanfill93
01/15
E2open's SaaS revs beat expectations, but Q4 guide disappointed. BofA's call seems on point, but market may surprise us. 🤔
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Blue Chip Picker
01/15
@jstanfill93 What's your take on E2open's long-term potential?
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SeabeeSW3
01/15
E2open's SaaS revs beat expectations, but Q4 guide disappointed. BofA's call: Underperform. Not convinced yet, holding off on $ETWO.
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k_ristovski
01/15
@SeabeeSW3 How long you been holding off on ETWO? Got any specific price target in mind?
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moazzam0
01/15
SaaS revs up sequentially, but still declining YOY. Mixed signals or just a tough sector? 🤔
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Anklebreakers10
01/15
BofA analyst just pulled the price target. Wonder how many others will follow. $EXPO's got some skeptical voices.
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The_Sparky01
01/15
@Anklebreakers10 Yeah, target drops, bears wake.
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michael_curdt
01/15
@Anklebreakers10 What's next for $EXPO?
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11thestate
01/15
SaaS rev growth tough when guidance dips.
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josh252
01/15
Underperform rating sticks. I'm holding a small position, watching for a bounce. Might add more if it dips below $3.
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WoodKite
01/15
BofA's price target drop to $3.25 reflects the bearish sentiment. E2open needs to prove growth momentum. 🤔
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Excellent_Chest_5896
01/15
E2open's margins could use some love. Gross margin contraction isn't ideal, but not surprising given the declines.
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VirtualLife76
01/15
@Excellent_Chest_5896 Margins tight, but can improve.
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Wonderful_Touch5652
01/15
@Excellent_Chest_5896 Gross margin dip sucks, but hey, at least they beat revenue expectations, right?
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statisticalwizard
01/15
E2open's $1.05B buyback is a big move. Could signal they're expecting even lower stock price. Just a theory.
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mattko
01/15
$EXPI underperforming, time to reevaluate strategy?
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Accomplished-Back640
01/15
BofA stays bearish, $EXPI still a ways down
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Ok-Memory2809
01/15
BofA's play here is cautious. Not bullish on $EXPO's growth story right now. Could be a rough ride ahead.
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