Cloudera Inc (NYSE:CLDR) saw its shares tank 40% over trading on Wednesday, after the cloud software company reported fourth-quarter results, which were ahead of estimates, but full-year guidance missed by a wide margin.
Specifically, total and subscription revenues printed at $104mm and $84mm, respectively, above consensus of $99mm and $82mm. However, the company guided to total and subscription revenue of $435-445mm and $370-375mm, respectively, vs. consensus of $461mm and $388mm. Management called out softness in bookings in the first half due to changes in sales leadership and go-to-market motion.
Mizuho analyst Abhey Lamba commented, “We acknowledge significant pressure on the stock in the n-t as estimates move lower and investor concerns around potential end-market demand (vs. purely execution) heighten. We think management is being conservative in its outlook and there is room for upside to forecasts, which should help the stock perform over the NTM.”
“While net new customer acquisition remained consistent (evidenced by G8K additions), mgmt. saw softness in expansion activity among large customers, driving bookings weakness (which, in turn, is likely to result in lower net expansion rates and DR growth). Initiatives to tackle this include separation of quota carriers between net new acquisition and expansion activity in addition to greater focus on highend G8K logos. While it remains to be seen if bookings can recover in F2H, we note similar scaling issues at other fast growing software companies early on. Customer acquisition costs remain high and need to be monitored in the n-t,” the analyst added.
As such, Lamba reiterated a Buy rating on Cloudera shares, while tweaking his price target from $24 to $23, which implies an upside of 72% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Abhey Lamba has a yearly average return of 13.6% and a 69% success rate. Lamba has a 14.8% average return when recommending CLDR, and is ranked #171 out of 4758 analysts.
Overall, out of the 11 analysts polled in the past 12 months, 7 rate Cloudera stock a Buy, while 4 rate the stock a Hold. With a return potential of 64%, the stock’s consensus target price stands at $21.89.