Sprout Social downgraded to Underweight from Sector Weight at KeyBanc

KeyBanc analyst Jackson Ader downgraded Sprout Social to Underweight from Sector Weight with a $28 price target. The company is facing a weaker bookings year “than even the sharply slower reported numbers imply,” the analyst tells investors in a research note. The firm says Sprout’s shift away from monthly customers toward larger, annual deals distorts some of the metrics that the company reports. Current bookings and remaining performance obligation are inflated when monthly cohorts are converted to annual, contends KeyBanc. It finds that Sprout’s first half bookings may not have just slowed materially but, in fact, may have declined year-over-year on an organic basis. The firm expects this performance to have longer lasting impacts on financials.