Needham & Company Downgrades Constant Contact (CTCT) to Hold following Q3, Outlook
Needham & Company downgraded Constant Contact (NASDAQ: CTCT) from Buy to Hold.
The firm comments, "Despite the nonperformance already baked in shares (1.6x EV/13Rev), we’re downgrading our rating to Hold to reflect the increased uncertainty around underlying trends (health of core email and broader product strategy all called into question). We would await clearer evidence on sales execution improvements and the potential for accelerated growth before getting more constructive on shares. While we acknowledge that we could see some mild and seasonal metric improvements off "trough levels" in Q4 (management has noted some encouraging improvement in conversion rates and customer adds y/y over the past month), we're not entirely convinced that one quarter of mild improvement could be enough to drive multiple expansion near term. Q3 performance was surprisingly and notably disappointing, especially given the clear deterioration in gross adds and netadds, both y/y and q/q. Grossadds were 35K (vs. 45K in 2Q), and netadds were 5K (vs. 15K in 2Q) which were even below our worst case scenario of 40K and 10K respectively."
For an analyst ratings summary and ratings history on Constant Contact click here. For more ratings news on Constant Contact click here.
Shares of Constant Contact closed at $17.03 yesterday, with a 52 week range of $15.66-$32.18.
The firm comments, "Despite the nonperformance already baked in shares (1.6x EV/13Rev), we’re downgrading our rating to Hold to reflect the increased uncertainty around underlying trends (health of core email and broader product strategy all called into question). We would await clearer evidence on sales execution improvements and the potential for accelerated growth before getting more constructive on shares. While we acknowledge that we could see some mild and seasonal metric improvements off "trough levels" in Q4 (management has noted some encouraging improvement in conversion rates and customer adds y/y over the past month), we're not entirely convinced that one quarter of mild improvement could be enough to drive multiple expansion near term. Q3 performance was surprisingly and notably disappointing, especially given the clear deterioration in gross adds and netadds, both y/y and q/q. Grossadds were 35K (vs. 45K in 2Q), and netadds were 5K (vs. 15K in 2Q) which were even below our worst case scenario of 40K and 10K respectively."
For an analyst ratings summary and ratings history on Constant Contact click here. For more ratings news on Constant Contact click here.
Shares of Constant Contact closed at $17.03 yesterday, with a 52 week range of $15.66-$32.18.