Why Did Cognyte Software Plunge 31%?

Cognyte Software (NASDAQ: CGNT) lost over a quarter of its market capitalization on April 5, after the company reported worse-than-expected Q4 results.

Cognyte is a global leader in security analytics software that helps governments and enterprises analyze and visualize disparate data sets at scale to help their teams ensure a safer world.

Earnings and revenue significantly lagged expectations due to ongoing supply chain challenges and lower-than-expected conversions of the company’s pipeline.

The company did not provide any outlook for FY2023 or any other long-term targets due to the lack of clarity on looming uncertainties.

Q4 Miss

Adjusted earnings of $0.16 per share fell six cents short of analysts’ expectations of $0.22 per share. Furthermore, it was a significant decline over the previous year’s reported earnings of $0.36 per share.

Furthermore, revenues were flat year-over-year at $125 million, but lagged consensus estimates of $129.55 million.

The quarterly revenues fell far short of the guidance provided by the company and were below the midpoint of the prior guidance by several million dollars .

Management Commentary

Cognyte CEO, Elad Sharon, commented, “Looking forward, we believe we are well positioned for sustained growth over the long-run…The market’s fundamentals have not changed. Security threats are increasing, and governments are seeking innovative analytical solutions. We are a market leader with a long history of growth and innovation and will continue to help our customers address their evolving security challenges.”

Wall Street’s Take

Following the dismal Q4 results, Needham analyst Mike Cikos downgraded Cognyte software from Buy to Hold.

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on one Buy and one Hold. The average Cognyte Software price target of $13 implies 61.89% upside potential to current levels.

TipRanks’ Stock Investors Tool Weighs In

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on Cognyte Software, with 10.7% of investors reducing their exposure to CGNT stock over the past 30 days.

Bottom-Line

Investors’ confidence in the stock was negatively impacted by the Q4 miss, as witnessed by the sharp share price decline. The bigger concern is that the company refrained from providing the outlook for FY2022. Year-to-date, the stock is down almost 50%. Investors will likely wait for a few positive quarters before taking a position in the stock.

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