Yext Sinks 19% As Its 4Q Sales Outlook Disappoints; Analyst Cuts PT

Shares of Yext plummeted 18.8% on Friday after the cloud-based search company’s 4Q sales guidance missed analysts’ estimates. However, its 3Q loss of $0.02 per share topped the Street’s expectations of a loss of $0.08 and compared to the year-ago loss of $0.19.

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Its 3Q revenues increased 17.1% to $89.1 million and exceeded the consensus estimates of $87.2 million.

Yext’s (YEXT) CEO Howard Lerman said, “We had a solid third quarter, indicating that people are hungry for a disruption in search.” Lerman added, “In addition to helping more businesses than ever before drive more branded searches on their own websites, we’re continuing to stay laser focused on sales efficiency.”

As for 4Q, the company expects revenues to be between $87 million to $89 million, compared to analysts’ estimates of $94 million. Yext anticipates an adjusted net loss per share in the range of $0.08 and $0.10, compared with the Street’s estimates for a loss of $0.08. (See YEXT stock analysis on TipRanks)

Following the results, Berenberg Bank analyst Brett Knoblauch lowered the stock’s price target to $16 (2% upside potential) from $17 and maintained a Hold rating.

“Relative to the broader SaaS peer group, Yext has consistently traded at a discount due to inconsistent execution,” Knoblauch wrote in a note to investors.

The analyst added, “We have seen multiple examples of SaaS companies whose revenue growth decelerate while they focus on costs, and the result is that shares have trouble re-rating higher. As such, we expect Yext’s multiple to remain pressured until top-line momentum returns.”

Unlike Knoblauch, most of the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 5 Buys and 1 Hold. The average price target stands at $20.42 and implies upside potential of about 30.2% to current levels. Shares have increaed by 8.7% year-to-date.