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Shares of Smartsheet were 7.1% lower on Wednesday.
Courtesy of Smartsheet
Shares of
Smartsheet
were falling on Wednesday, as investors digested the work management software company’s wider-than-expected quarterly loss and conservative guidance.
Analysts, however, are optimistic the company can bounce back.
Smartsheet
(ticker: SMAR) reported on Tuesday evening an adjusted loss of 18 cents a share for its fiscal first quarter ended April 30. That was narrower than the consensus estimate for a loss of 19 cents, according to FactSet. But for the second quarter, the company expects an adjusted loss between 19 cents and 21 cents per share, compared with analysts’ forecast for a 17-cent loss.
Shares of Smartsheet slid 6.5% on Wednesday to $37.89. Shares of the company—a collaborative work platform that allows businesses to manage spreadsheets with teams in real time—have slumped 51% in 2022.
Technology stocks have broadly struggled this year, as rising interest rates in the U.S. and fears of a possible recession have weighed on many high-growth companies. For instance, the tech-heavy
Nasdaq Composite
has slid about 22% this year through Tuesday’s close, compared with roughly a 13% drop for the
S&P 500
.
Nonetheless, three analysts on Wednesday stood by their recommendations for the stock and weren’t concerned by Smartsheet’s prudent approach to guidance.
Truist Securities analyst Terry Tillman said the company’s guidance reflects the economic environment, and not the current state of demand for Smartsheet.
“It is important to note that the company is being conservative with guidance ranges in preparation for any potential broader macro impact on the business,” Tillman wrote in a research note Wednesday. “However, the company isn’t currently seeing any signs of a material macro impact on demand or results.”
Tillman added that if the company ultimately doesn’t experience or feel the affects of economic headwinds, then revenue and billings results could beat expectations. He maintained his Buy rating and $65 price target on Smartsheet.
The company posted April quarter revenue of $168.3 million, above analyst estimates of $162.5 million. Calculated billings—total revenue plus the change in deferred revenue in the period—were $180.1 million, which outpaced analyst estimates of $177.6 million, but marked a decline from the previous quarter’s total of $224.3 million.
Smartsheet also guided in its earnings report that free cash flow should break even for full fiscal year 2023. Oppenheimer analyst George Iwanyc wrote in a note that he’s “encouraged to see management incorporate a more conservative macro view and believe it can adjust more aggressively if demand signals start to weaken.” He maintained his Outperform rating on Smartsheet but lowered his price target to $65 from $85.
Like Iwanyc, JP Morgan analyst Pinjalim Bora also held onto a bullish rating, but reduced the price target to $50 from $80.
Of the14 analysts polled on FactSet, 13 have a Buy rating on Smartsheet while one has a Hold rating.
Write to Angela Palumbo at [email protected]
