Oppenheimer Cuts Price Target Following Vonage's (VG) 'Messy' 4Q

Oppenheimer maintained an Outperform rating on Vonage (NYSE: VG), and cut the price target to $6.50 (from $8.00), following the company's 4Q earnings report. VG reported in-line results in a "messy" quarter, as the acquisition of Icore and the termination of Basic Talk, hurt revenue guidance for 2016. Consolidated revenue of $230M, was below Oppenheimer's estimate, while EBITDA of $34M was in-line. EPS of $0.06 beat estimates by a penny, driven by cost control measures.

Analyst Timothy Horan commented, "Vonage reported an in-line but messy quarter given the acquisition of Icore and the termination of Basic Talk, which hurt revenue guidance for 2016. We believe the results mask the underlying strength of the business. Business bookings in the quarter were strong, and VG is exiting unprofitable consumer products, which we believe is the correct strategy. The revenue guide was also hurt by the fact that some of the newly acquired businesses were growing at half the rate of VBS, but this will reverse. VG can use its FCF to continue to make accretive acquisitions. We believe the company can further improve profitability in the consumer business, which should stabilize in a few years. VG trades at a large discount to pure-play business peers."

For an analyst ratings summary and ratings history on Vonage click here. For more ratings news on Vonage click here.

Shares of Vonage closed at $4.72 yesterday.

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