Analyst Derrick Wood from TD Cowen maintained a Hold rating on Rimini Street (RMNI – Research Report) and increased the price target to $3.50 from $3.00.
Derrick Wood has given his Hold rating due to a combination of factors surrounding Rimini Street’s recent performance and future prospects. The company reported a modest revenue growth of 2%, which was slightly above expectations, but when adjusted for one-time events, it actually showed a decline of 3%. This indicates that while there are positive developments, such as favorable court rulings and strategic changes, there is still significant work needed to achieve consistent positive growth.
Furthermore, Rimini Street’s operational metrics, like gross margin and operating margin, exceeded expectations, yet these were also influenced by one-time contract adjustments. The company’s net revenue retention rate has slightly decreased, and while there is an increase in large deals, the overall customer growth has been sluggish. The reassessment of the PeopleSoft business and the potential for improved demand signals are positive, but the lack of new order acceptance and contract renewals adds uncertainty. Overall, while there are encouraging signs, the mixed results and ongoing strategic reassessments justify a cautious Hold rating.