On Thursday, Oppenheimer adjusted its outlook on Consensus Cloud Solution Inc. (NASDAQ:CCSI), reducing the price target to $20 from the previous $29, while retaining an Outperform rating on the stock. This revision comes in the wake of the company's first-quarter 2024 earnings report.
The company reported first-quarter EBITDA of $48 million, surpassing both the analyst's and the consensus estimate of $45 million and $46 million, respectively. This beat was attributed to growth in the Corporate sector and effective cost control measures. Consensus Cloud Solution's revenues matched expectations, coming in at $88 million, which was consistent with both the analyst's and the consensus estimate.
A year-over-year increase of 4% in Corporate revenues highlighted the success of upselling in the small office/home office (SoHo) segment and robust sales of advanced products. On the other hand, SoHo revenues saw a 13% decline, which was anticipated due to reduced marketing expenditures and a shrinking customer base.
Despite the positive performance in the first quarter, Consensus Cloud Solution is experiencing slower decision-making processes among large enterprise customers. The company's guidance for the second quarter includes revenues ranging from $84.5 million to $88.5 million, adjusted EBITDA between $46 million and $49 million, and adjusted earnings per share from $1.30 to $1.36. The full-year 2024 guidance remains unchanged.
The price target reduction to $20 reflects ongoing challenges in enterprise sales cycles and the gradual recovery of the Corporate channel. Nevertheless, Oppenheimer continues to see the company's stock favorably, hence the decision to maintain the Outperform rating.
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