Avaya Holdings (AVYA) Thoughts After Investor Conference Presentations Disappoint - Craig-Hallum

Craig-Hallum analyst George Sutton reiterated a Buy rating and $40.00 price target on Avaya Holdings (NYSE: AVYA) after management attended two investor conferences and provided a
better-than-expected annual revenue growth outlook over the next 3 years, including an ARR target of $2B by FY24. The analyst also believes that the company’s commentary on the CCaaS/ACO pipeline, overall momentum in the cloud/subscription business, new logo wins and ARPU expansion opportunities through CCaaS and CPaaS were encouraging. However, the outlook for Adj. EBTIDA and Cash Flow From Operations margins implied Adj. EBITDA and CFFO flat to down for FY22 which was below expectations.

The analyst stated "The negative reaction in the stock demonstrates that the value crowd continues to beat out the growth/GARP crowd in what’s become a frustrating tug-of-war. Below is how we view the outlook and points made in the presentations along with why we think the stock continues to be a great opportunity:

• Successfully executing on transitioning largest installed base of UC & CC (100M & 6M, respectively) seats from on-prem to cloud/subscription…
• Non-legacy (Cloud & Subscription) business growing 55% with legacy declining -20%
• Majority of new bookings are Cloud or Subscription
• 50% of ACO seats are coming from new logos
• “Mid-single” and “High-single” digit total revenue growth expected in FY23 and FY24, respectively. Up from 2.5% in FY21.

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

Shares of Avaya Holdings closed at $19.86 yesterday.

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