Avaya Holdings Posts Stellar Q4 Beat; Shares Leap 22%

Avaya Holdings (AVYA) delivered outstanding fiscal fourth-quarter results and also set robust long-term targets for fiscal 2023 and 2024. However, the company’s Fiscal 2022 guidance was set below analysts’ expectations.`

Shares of the company jumped 22% on November 22 to close at $22.

`Avaya, with a current market capitalization of $1.9 billion, is a provider of digital communications products, solutions, and services for businesses. The Company operates through two segments: Products & Solutions and Services. (See Avaya Holdings stock charts on TipRanks)

Strong Q4 Beat

Markedly, Q4 adjusted earnings of $0.77 per share almost doubled year-over-year, exceeding analysts’ expectations of $0.72 per share. The company reported earnings of $0.39 per share for the prior-year period.

Similarly, revenues of $760 million significantly exceeded analysts’ estimates of $740.33 million, and were slightly up year-over-year. The top-line benefited from OneCloud annualized recurring revenue (ARR), which increased 25% to $530 million.

However, adjusted gross margin declined 90 bps to 60.4% during the quarter.

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Avaya Holdings Provides Fiscal 2022 and Long-Term Guidance

Looking ahead, management provided the financial guidance for FY2022 as well as impressive long-term targets for fiscal 2023 and 2024.

For FY2022, the company forecasts adjusted earnings in the range of $2.85 to $3.03 per share, while the consensus estimate is pegged at $3.16 per share. Revenues are forecast to be in the range of $2.975 billion to $3.025 billion, versus the consensus estimate of $2.98 billion.

For the fiscal first quarter, adjusted earnings are likely to range between $0.63 and $0.65 per share, while the consensus estimate is pegged at $0.79 per share. Revenues are projected to be in the range of $725 million to $745 million against the consensus estimate of $747.7 million.

In the long-term, the company projects revenue growth in the low to mid-single digit and in the mid-to high-single digit year-over-year in fiscal 2023 and 2024, respectively.

Management Weighs In

Avaya, CEO Jim Chirico, commented, “This year marked a real and substantive milestone for the company and I couldn’t be prouder of the performance or more thankful for the commitment of our customers and partners and performance of our global team as we’ve navigated a purposeful and deliberate journey of transformation to be an enterprise cloud leader.”

Wall Street’s Take

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 4 Buys and 3 Holds. The average Avaya Holdings price target of $28.86 implies 31.18% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 100% Bullish on AVYA, compared to a sector average of 69%.