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LivePerson Spikes 15% On Raised Profit Guidance; Needham Almost Doubles PT

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Shares in LivePerson are leaping almost 15% in pre-market trading after the company raised its revenue and profit outlook for the year fueled by a robust sales pipeline and increased demand from existing customers.

The stock is surging to $52.90 in Wednesday’s pre-market trading after the company lifted its 2020 adjusted EBITDA to a range of $16 million to $19 million, up from prior guidance of $3.5 million to $10.5 million. The Street consensus was for $6.6 million. LivePerson (LPSN) also raised its full year 2020 revenue guidance to a range of $357 million to $361 million, up from previous guidance of $340 million to $355 million. Analysts had forecast $347.45 million. For the third quarter, the company expects to generate $92 million-$93 million, which is above the analyst consensus of $89.35 million.

In addition, LivePerson is targeting full-year growth of 22% to 24%, up from 17% to 22% previously. LivePerson is helping companies to better communicate with customers through its AI-based communication platform. The coronavirus pandemic has forced multiple call centers around the world to change their work mode from office- to-home, which in turn has boosted demand for the company’s services.

“We expect that our focus on internal automation and a tight discipline around expense controls will enable the company to continuing driving year-over-year profit improvements and margin expansion even while investing in key growth drivers of AI, product innovation, go-to-market capacity and tech infrastructure,” the company said in a statement. “LivePerson is entering the second half of 2020 with a favorable backdrop comprised of strong year-to-date contract signings, better-than-anticipated conversation volumes on our platform and a robust sales pipeline.”

LivePerson added that it “continues to balance this strengthening outlook with a healthy respect for the potential risks that may arise from a poor macroeconomic environment.”

Following the guidance, Needham analyst Ryan MacDonald ramped up the stock’s price target to $60 (30% upside potential) from $33 and reiterated a Buy rating, saying that the company is “firing on all cylinders.”

“The COVID-19 pandemic has clearly driven increased volumes within the contact center, requiring businesses to expand the number of channels through which they can interact with consumers,” MacDonald wrote in a note to investors. “We expect LPSN to remain a key beneficiary and continue to accelerate top line growth into FY21, while also improving leverage in the model.”

The rest of the Street shares MacDonald’s bullish outlook. The Strong Buy analyst consensus boasts 9 Buys versus 2 Holds. With shares up 25% so far this year, the $47.70 average price target implies a modest 3.2% upside potential to current levels. (See LPSN stock analysis on TipRanks)

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