Pivotal Software (NYSE: PVTL) fell over 20 percent after the company's second-quarter print. Here's a roundup of how the sell-side reacted.
- Credit Suisse analyst Brad Zelnick maintained an Outperform rating on Pivotal with a $25 price target.
- KeyBanc analyst Alex Kurtz maintained an Overweight rating and $27 price target.
- Barclays analyst Raimo Lenschow maintained an Equal Weight rating and $22 price target.
- Morgan Stanley analyst Sanjit Singh maintained an Overweight rating and $29 price target.
Credit Suisse's Zelnick said Pivotal's subscription revenue reached $97.5 million against a Street estimate of $94.8 million. This growth was driven by expansion, new customer adds and increased operating cash flow, the analyst said.
Barclays' Lenschow said Pivotal demonstrated a better-than-expected net expansion rate of 150 percent, which often indicates an expansion plan that is working.
Morgan Stanley's Singh said the services mix continues to grow in congruence with a 9-percent year-over-year increase in services revenue. The operating margin improved significantly, the analyst said.
KeyBanc's Kurtz said Pivotal displayed several weaknesses in the earnings report.
“Other key metrics such as $790 million in RPO (remaining performance obligation, a combination of backlog and deferred revenue) and net expansion rate of 150 percent suggest overall demand appears intact, and management outlined the billings weakness as a function of quarter-to-quarter deal lumpiness,” he said.
Billings growth was less than 2 percent, which, according to Barclays' Lenschow, is uninspiring.
After a strong first quarter, Pivotal only added 15 enterprise customers, the analyst said.
KeyBanc's Kurtz reiterated several key elements and investment considerations, including:
- The dollar-based net expansion, which refers to the cohort group of customers, and should create some challenges to recent activity.
- New customer additions. While they are important, execution in top accounts is more critical.
- Pivotal’s view that remaining performance obligation is the best indicator of total pending revenue, as it includes longer-duration deals with more stability.
Pivotal shares were down 19.86 percent at $23 at the close Thursday.
Analyst: Here's What's Driving Pivotal Software's Post-Earnings Weakness
Morgan Stanley Sees Strong Growth Ahead For Pivotal Software
Latest Ratings for PVTL
|Sep 2018||Morgan Stanley||Maintains||Overweight||Overweight|
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