Synchronoss Technologies, Inc. (NASDAQ:SNCR) shares are racing almost 33% today after deal discussions are back on the table with biggest shareholder Siris Capital.
Initially, talks had been extinguished and Synchronoss passed after Siris did not want to agree to an exclusive negotiation- not when so many (alleged) offers were coming in that were enticing the software maker. However, Synchronoss barely tossed and turned before Siris was once again in its good graces, perhaps having upgraded its terms and conditions for the deal to win the tech firm over. Apparently, absence truly does make a company grow fonder when it comes to business dealings.
Keep in mind, however, this is a stock that has nonetheless seen a 63% loss in value this year on the heels of the company’s CEO and CFO suddenly exiting its doors- just to have founder and chairman of the SNCR board Stephen Waldis step back into his old CEO shoes and prior CFO Lawrence Irving return to his former glory.
The cause for such radical corporate changes running amiss? Synchronoss suffered following an $800 million plus Intralinks takeover, with the corporate team at the time releasing a statement that the first quarter of the year would miss the original guide’s expectations to the harsh tune of $13 to $14 million and operating margins would underperform the outlook by 8% to 10%. It could not have been by mere happenstance that such a management upset ensued.
Deutsche Bank analyst Nandan Amladi still sees a path with various thorns ahead for the tech player, always having thought a transaction could offer a “clean exit for SNCR shareholders,” as he highlights “mounting complications: integration of Intralinks, divestiture of the Activation business, financial restatements, credit agreements, and delayed SEC filings.”
For now, the analyst surveys Synchronoss with tremendous caution from the sidelines, rating a Hold rating on the stock with a price target of $10, which implies a just under 30% downside from where the stock is currently trading. (To watch Amladi’s track record, click here)
Should the tech player eventually choose to divest Intralinks “to get more breathing room,” with “Verizon acquiring the remaining cloud business,” explains Amladi, perhaps Synchronoss can attack its debt covenants picture.
“We believe the company will likely see further delays in filings as the restatement work gets completed. The return of the old guard (CEO Stephen Waldis and CFO Larry Irving) does provide a semblance of stability, but we’ve seen little progress on the reporting front,” underscores the analyst, apprehensive on SNCR’s prospects.
When it comes to this mover and shaker, the Street does not view the company too favorably, as TipRanks analytics reveal SNCR as a Sell. Based on 3 analysts polled by TipRanks in the last 3 months, 2 maintain a Hold on Synchronoss stock while 1 issues a Sell. The 12-month average price target stands at $10.00, marking a nearly 30% downside from where the stock is currently trading.