Shares in Synchronoss Technologies plunged 6.5% in Monday’s extended market session after the cloud products company disclosed that its CEO resigned over allegations of “personal misconduct”.
Synchronoss (SNCR) announced that its Board of Directors has appointed Jeff Miller as interim President and CEO, effective immediately, in addition to his role as Chief Commercial Officer. The move comes after Glenn Lurie resigned as CEO following the Board of Directors’ review of allegations of “personal misconduct”, which were in violation of the company’s policies.
Synchronoss added that the resignation is not tied to the company’s strategy, financial or business performance. Following the appointment, the Board of Directors will now conduct an executive search to pick a new CEO.
“Synchronoss continues to develop innovative technology and solutions for some of the world’s leading technology and telecommunications companies,” Synchronoss founder Stephen Waldis said. “The Board and I look forward to working with Jeff and the broader Synchronoss management team to drive forward the ongoing transformation of Synchronoss, building on the strength of our customer relationships, and delivering long-term value to our shareholders.”
The company confirmed that it is maintaining its 2020 guidance on EBITDA of $20 million to $25 million, as guided in its second quarter earnings release dated on August 10. Additional details relating to its financial performance and business outlook will be provided during its quarterly earnings call in November, the company said.
Despite the announcement, Canaccord Genuity analyst Michael Walkley reiterated a Buy rating on the stock with a Street High $11 price target (200% upside potential) saying that the current “valuation of less than 1x 2021E EV/revenue offers a compelling entry point for investors”. (See SNCR stock analysis on TipRanks)
“We believe Jeff Miller has strong customer relationships and Synchronoss has a strong team to execute on its strategies. Our positive investment thesis is based on the ongoing transformation with management delivering profitable growth through recently signed tier-1 deals,” Walkley wrote in a note to investors. “With several cloud deals starting to ramp; continued growth potential at Verizon, which just renewed its White-Label Personal Cloud Platform for 5 years; progress on blue-chip DXP and IoT partnerships with Amazon, Rackspace, AT&T and others; and strong annual RCS revenue contributions anticipated from the CCMI and Japanese deals, we believe there are several strong building blocks to support our estimates.”
The rest of the Street is in line with Walkley’s bullish outlook with a Strong Buy analyst consensus. With shares down 23% this year, the $8.50 average analyst price target implies 131% upside potential in the shares over the coming year.
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