As industries pivot towards a digital-first approach, AI’s importance in streamlining business processes, driving innovation, and curbing costs has never been greater. Leading the charge is Concentrix Corporation (CNXC), a player in the technology-powered customer experience (CX) solutions space. Its recent release of iX Hello, a GenAI-powered self-service technology, offers new tricks in productivity, engagement, and security.
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However, it’s not all smooth sailing, with the company missing recent earnings expectations and its stock declining 20% over the past three months. Despite this, analysts following the company have maintained a positive outlook, with expectations of consistent earnings growth over the next few years, backed by modest revenue growth, margin expansion, and share repurchases. It trades at a discount to industry peers, making it a potentially appealing candidate for value-oriented investors.
Concentrix Expands With AI Offering
Concentrix Corporation is a prominent player in technology-infused customer experience (CX) solutions. The organization offers a wide array of services, including CX process optimization, front and back-office automation, analytics, and business transformation services. Its clients come from the technology industry, consumer electronics, retail, and more.
Recently, Concentrix announced the launch of iX Hello, a GenAI-powered self-service application. The software is designed with built-in innovation, which enables companies to use it as an accelerator for the GenAI adoption journey. It facilitates the creation of GenAI experiences within a secure, private, and compliant environment.
Additionally, the new offering allows companies to leverage GenAI to align with their brand-specific voice and vocabulary. The software can translate market-ready content in over 90 languages, analyze data, answer chat or voice queries, summarize content, create training, and more.
Concentrix’s Recent Financial Results
The company recently reported its financial performance for the third quarter. Revenue showed a year-over-year gain of 46.2% from the previous year’s third quarter, reaching $2.39 billion, compared to the $1.6 billion. However, the company’s operating and net income experienced a downturn with a fall of 5.6% and an immense decrease of 78.6%, primarily attributed to rising amortization of intangibles and planned integration costs due to the company’s merger with Webhelp.
The firm’s adjusted EBITDA also surged 44.1%, totaling $388.1 million. Yet, non-GAAP EPS of $2.87 fell short of analysts’ expectations by $0.06.
The Board of Directors has declared a quarterly dividend of $0.33275 per share, payable on November 5, 2024, to shareholders recorded as of October 25, 2024. In the third quarter, the company repurchased 0.6 million shares for $39.1 million, with an average price of $64.89 per share, under its ongoing share repurchase program.
CNXC’s management has issued guidance for the fourth quarter of fiscal 2024, forecasting revenue of $2.420 billion to $2.470 billion. Non-GAAP operating income is anticipated to range from $335 million to $355 million. Non-GAAP EPS is expected to be $2.90 to $3.16. For the full fiscal year 2024, the projected revenue is between $9.591 billion to $9.641 billion. Non-GAAP operating income is anticipated to be $1,306 million to $1,326 million. The non-GAAP EPS for the year is forecast at $11.05 to $11.31.
What Is the Price Target for CNXC Stock?
The stock has been downward trending, shedding roughly 33% over the past year. It trades at the low end of its 52-week price range of $50.23 – $106.10 and shows ongoing negative price momentum by trading below its 20-day (59.91) and 50-day (63.78) moving averages. However, the price drop has pushed the stock into value territory, as its P/E ratio of 17x sits well below industry peers in the Information Technology Services industry, where the average P/E is 26.3x.
Analysts following the company have been constructive on CNXC stock. Based on five analysts’ collective recommendations, Concentrix is rated a Strong Buy. The average price target for CNXC stock is $79.00, representing a potential upside of 50.25% from current levels.
Concentrix in Consideration
Despite facing some headwinds with missed earnings and a stock decline, Concentrix shows potential for a rebound. The company’s recent foray into GenAI-powered services has analysts optimistic despite reporting decreased expectations for revenue in the fourth quarter. The stock trades at a discount, suggesting CNXC may be tempting for value-oriented investors who believe in the company’s commitment to drive growth and deliver technology-powered solutions.
