Everbridge CEO Resignation Raises Execution Risks. Analysts Downgrade the Sinking Stock.
Everbridge shares were plummeting after CEO David Meredith resigned, prompting analysts to downgrade their ratings on the stock amid execution concerns.
The enterprise software company also reiterated fourth-quarter guidance but provided preliminary revenue growth guidance for 2022 of 20% to 23%, lower than Wall Street’s consensus forecast of 24.5% or $457.9 million.
The stock tumbled 47% to $61.54. Earlier in the session the stock set a 52-week low of $57.58.
Meredith will resign as CEO and a member of the board, effective Jan. 30. In the interim, Everbridge (ticker: EVBG) has tapped Chief Financial Officer Patrick Brickley and Chief Revenue Officer Vernon Irvin to serve as co-CEOs until a permanent replacement is found.
Analysts at J.P. Morgan downgraded the stock to Neutral from Overweight and reduced their price target to $127 from $200.
The analysts lowered their 2022 revenue estimates by 22.5% to $451 million from $460 million and said they were raising their expense assumptions “in anticipation of potential disruption from the leadership changes. “
“The 2022 guidance is below our previous estimate, and we are concerned about the possible disruption that this sudden management change might cause,” said J.P. Morgan analyst Sterling Auty in a research note.
Raymond James maintained its rating on the stock at Outperform, writing that it believes the company “may be in a unique situation to have a smooth transition in this regard, with Mr. Brickley and Mr. Irvin also having the help of Chairman (and former CEO) Jaime Ellertson.”
Raymond James analyst Brian Peterson said the bigger concern is the 2022 outlook, “which suggests a deceleration in growth despite a number of key catalysts.”
“While we’re cognizant that guidance has historically proven conservative, the outlook will only fuel the debate on the durable organic growth rate for the company, where bulls and bears are seemingly diverging,” wrote Peterson.
Needham downgraded Everbridge to Hold from Buy. “We view the guidance as an indication EVBG’s organic growth rate in FY22 will be materially below consensus expectations,” the analysts wrote in a research note.
Write to Karishma Vanjani at [email protected]
