Cognyte Software (CGNT) shares lost over one-fourth of their market capitalization on June 28 after the company reported disappointing Q1 results that fell far below analysts’ consensus estimates.
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Both top-line and bottom-line significantly lagged expectations due to ongoing supply-chain challenges and lower-than-expected conversions of the company’s pipeline due to the difficult macroeconomic and geopolitical environment.
Cognyte is a global leader in security analytics software that helps governments and enterprises analyze and visualize disparate data sets at scale to help their teams ensure a safer world.
Missing on Earnings and Revenue
The company reported an adjusted loss of $0.79 per share, which fell massively short of the Street’s estimated earnings of $0.09. Moreover, it was much worse than the earnings per share of $0.20 reported in the prior-year period.
Furthermore, its revenue of $86.7 million in the quarter was also way short of the $112.6 million consensus and down 24.7% from the $114.7 million reported a year earlier.
Wall Street’s Take
Following the dismal Q1 results, Evercore ISI analyst Kirk Materne downgraded Cognyte Software from Buy to Hold and also slashed the price target by over 50% to $5 from $12.
Given limited visibility, the ongoing uncertainties, and recent execution challenges, Materne believes “there are simply better options in the space at this point with fewer question marks when looking out 12-18 months.”
The rest of the Wall Street Community has a Hold consensus rating based on one Buy and four Holds. The average Cognyte Software stock forecast of $7.33 implies 58.3% upside potential from current levels.
Conclusion
Shares of Cognyte Software have lost over 80% in the past 12 months.
There seems to be little to no visibility on any possible turnaround, given the fact that management refrained from providing any guidance for the upcoming quarter or the full year.
While the other players in the industry reported robust trends in the cyber security space, Cognyte Software has continued to struggle with the same issues for months now.
Consequentially, investors chose to exit their holdings, seeing no signs of respite in the coming months.
