Earnings season continued to have an impact on individual stocks, and Genworth Financial Inc (NYSE:GNW) and Tableau Software Inc (NYSE:DATA) were losers in finishing with weak advances on the day. Let’s take a look and see what the analysts have to say about GNW and DATA.
Genworth Financial Inc
Genworth Financial shares dropped 22% on Friday after the company reported disappointing earnings results, posting an operating loss of $0.17 per share, well below the consensus estimate that it would earn $0.21 per share. Furthermore, as part of a restructuring plan, the company will suspend sales of traditional life insurance and fixed annuities.
Reacting was BTIG analyst Mark Palmer, which slashed his price target to $5.00 (from $10.00), while reiterating a Buy rating on Genworth shares.
Palmer commented, “The headlines arising from Genworth Financial’s 4Q15 report have inevitably focused on the company’s decision to suspend all sales of traditional life insurance and fixed annuity products this quarter given the impact of the company’s below investment grade credit ratings as reflected in recent sales volumes. However, we believe that move is overshadowing several of the positives emerging from GNW’s report, most notably much-needed stability in the results of its troubled long-term care (LTC) unit as well as its Australia and Canada mortgage insurance units.”
“While the company faces significant challenges, we believe their impact is already reflected in a stock trading at just 0.14x its book value per share ex. AOCI as of YE15,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Palmer has a yearly average return of -18.2% and a 21.7% success rate. Palmer has a -36.1% average return when recommending GNW, and is ranked #3610 out of 3621 analysts.
Out of the 8 analysts polled by TipRanks, 3 rate Genworth Financial stock a Buy, 4 rate the stock a Hold and 1 recommends a Sell. With a return potential of 247%, the stock’s consensus target price stands at $7.59.
Tableau Software Inc
Tableau Software shares cut in half on Friday after the company reported a significant deceleration in its business, with F4Q license revenue coming in below the Street estimate. Management acknowledged that it saw some softness in the spending environment in North America, where revenue declined 35% y/y in the quarter after showing 63% growth in the first nine months of the year.
After reviewing the earnings, Brean Capital analyst Yun Kim reiterated a Hold rating on shares of Tableau, while lowering his fair value estimate to $52 from $86.
Kim commented, “Given that its new customer count remains positive, we believe execution on the “expand” part of the land-and-expand sales strategy was the culprit, which implies poor sales execution on large deals. From our experience, such execution issue takes time to resolve because it requires a new approach to sales processes and also involves rebuilding the sales organization with sales personnel who can execute on large deals. Hence, we remain wary of the necessary transition it needs to undergo to better manage flow of large deals in its sales activity and also complexity of larger deployments, which could introduce more volatility in its performance during the transition.”
The analyst continued, “With management providing a lowered outlook, we have reduced our estimates meaningfully going forward. Also, its decision to continue to invest in the midst of a slower but potentially more volatile growth in 2016 introduces additional risk to the stock, in our view.”
“We advise investors to remain on the sideline until we see signs that DATA is successfully making the transition to an enterprise-ready platform company that can consistently execute on large deals,” Kim concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Yun Kim has a yearly average return of 5.9% and a 50.0% success rate. Kim has a 26.6% average return when recommending DATA, and is ranked #917 out of 3621 analysts.