Exela Dips 11.5% on Quarterly Loss

Shares of Exela Technologies (XELA) dipped 11.5% to close at $1.78 on Friday after the global business process automation company reported a loss of $0.09 per share for the third quarter of 2021. The reported loss was, however, lower than analysts’ loss estimate of $0.11 per share. Exela had recorded a loss of $0.60 per share in the same quarter last year.

Revenue of $279.2 million declined 8.5% year-over-year and missed the Street’s expectations of $315.7 million. The decline was mainly on the back of a reduction in volumes and underutilization of resources due to COVID-19.

Segment-wise, while Information and Transaction Processing Solutions revenue stood at $208.3 million, down 11.1% year-over-year, Healthcare Solutions revenue came in at $54 million, down 0.4%. However, Legal and Loss Prevention Services revenue rose 1.3% to $16.9 million.

Adjusted EBITDA in the third quarter fell 25.3% to $36.4 million year-over-year. (See Exela stock charts on TipRanks)

Financial Flexibility

As of September 30, 2021, Exela raised aggregate gross proceeds of $276 million from equity offerings. To reduce its debt and related interest expense obligations, along with making investments in growth, Exela used proceeds to repurchase $95 million of its debt as of November 4, 2021.

Outlook

Looking forward, the CEO of Exela, Ronald Cogburn, said, “The fundamentals of our business are strong and we are particularly pleased with the continued strong growth of our digital solutions for the SMB market where we see opportunity for further geographic expansion. We expect further improvements within our underlying business will lead to additional improvements in margins and cash flow in 2022.”

For 2021, the company projects revised revenue of $1.16 billion to $1.18 billion against the consensus estimate of $1.25 billion. Adjusted EBITDA margin is forecast between 16% and 17%.

Wall Street’s Take

Wall Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 2 Buys. The average Exela price target of $4.50 implies 153.5% upside potential to current levels. Shares have increased 37.6% over the past year.

Risk Analysis

According to the new TipRanks’ Risk Factors tool, Exela is at risk mainly from three factors: Finance and Corporate, Ability to Sell and Production, which contribute 26%, 24% and 18%, respectively, to the total 34 risks identified for the stock.