UPDATE: Evercore ISI Downgrades LivePerson (LPSN) to In Line

(Updated - February 25, 2022 3:14 AM EST)

Evercore ISI analyst Peter Levine downgraded LivePerson (NASDAQ: LPSN) from Outperform to In Line with a price target of $20.00 (from $75.00).

The analyst comments "While we remain bullish on the broader UC/customer engagement market, we are downgrading LPSN to In Line after reporting sub-par results and a weak outlook (~10% guide down from its initial outlook). We believe that there are simply better assets to own for those looking to get exposure to this market. Given the company’s inconsistent execution and an unclear strategy in terms of growth vs. profitability, LPSN is a stock where we clearly overestimated a potential multiple rerate. Given that the secular trends favoring messaging and digital commerce were long in play before COVID, based on mgmt’s 10% CY22 guide down and change in business strategy the current path towards capitalizing on any of these trends remains unclear. The initiative to double the sales force to 200 reps by the end of 1Q22 was pulled back and the company will now pause its hiring goals (144 reps as of Feb). While the initial reaction for some was that this was a clear indication of a demand slowdown, mgmt reiterated it was a shift in focus towards profitability and leveraging partners. In addition, mgmt guided down its initial CY22 guide from 27% growth to 17.5% at the mid-point or ~$40mn cut in absolute terms. The three core factors contributing to the guide down were 1) macro environment; 2) shopping trends shifting back towards pre-pandemic in-store experiences, negatively impacting the Gainshare business; and 3) government policy eliminating mandatory COVID-19 testing, which looked like a “virtual certainty” in 3Q is now off the table. Mgmt does not expect to renew or close any new COVID testing deals in CY22. The bottom line is that at 2x EV/CY23 sales, the downside risk is more limited at current levels, but tough to identify a n/t catalyst. While the recent news of an activist disclosing a small position was well received by investors, mgmt commentary would lead us to believe there have been no formal discussions held as of yet. We are moving to In Line and cutting our PT to $20 based on shares remaining range-bound at ~2x EV/CY23 sales."

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

Shares of LivePerson closed at $24.34 yesterday.

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