On Thursday, LivePerson Inc. (NASDAQ:LPSN) experienced a shift in stock rating as Roth/MKM changed its recommendation from Buy to Neutral. This adjustment came in response to the company's recent financial results and future revenue projections. The firm also set a new price target for the company's shares at $2.00.
The downgrade follows LivePerson's fourth quarter results for 2023, which, while aligning with the company's previously reduced expectations, did not meet the forecasts established by Roth/MKM. The analyst highlighted that the company's revenue and Adjusted EBITDA for the quarter fell short of their projections.
Looking ahead, LivePerson's guidance for 2024 presents a concerning picture, with an anticipated reduction of approximately $100 million, or 25%, from its already lowered revenue base. The firm attributed the decline to an increase in customer cancellations, which were linked to operational challenges that emerged in the middle of 2023.
Due to these cancellations and the subsequent downward revision of revenue and Adjusted EBITDA estimates, Roth/MKM expressed concerns over LivePerson's financial stability. Specifically, the firm pointed out that the company's capacity to refinance its maturing convertible notes is now significantly more uncertain than previously anticipated.
The analysts said, "LPSN's revenue and AEBITDA results for 4Q23 missed our forecasts but were fair versus its prior lowered outlook. However, further guidance cuts leaves roughly $100M or 25% of its lowered revenue base missing in 2024. Citing spiking cancellations caused by mid-2023 operational disruptions, we are left dramatically cutting revenue and AEBITDA forecasts which leaves its ability to refinance maturing convertible notes far more at risk than expected."
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