Based on our research, E2open stock appears to be a speculative buy at this point in time. The company reported fiscal Q4 2023 results on May 2, 2023 that missed revenue estimates and caused the stock price to drop nearly 30%. However, analysts at Craig-Hallum downgraded the stock from “buy” to “hold” following the results, indicating the sell-off may have been overdone.
E2open operates a supply chain management software platform and has grown primarily through acquisitions, most recently purchasing BluJay Solutions for $1.7 billion in May 2021. The company has a history of missing revenue estimates, but subscription revenue, which is viewed as the most important indicator by management, grew 11% year over year in fiscal Q2 2023. E2open also reaffirmed its EBITDA guidance for fiscal 2023 despite currency headwinds, highlighting its focus on profitability.
According to consensus estimates, e2open stock has a price target of $7.33, indicating potential upside of 16.6% from the current price of $6.29. We recommended purchasing the stock in October 2022 at $5, and it returned over 20% in a few weeks for those who followed that recommendation. While risks remain around integration of acquisitions and macroeconomic impacts, e2open’s subscription revenue growth and profitability focus could make the stock a buy at current levels for long-term investors.
In summary, despite the recent sell-off, e2open stock appears undervalued and could present an opportunity for significant upside, especially if subscription revenue growth continues and profitability improves over the next few quarters. However, risks around the company’s reliance on acquisitions for growth and sensitivity to macro impacts warrant a cautious approach. The stock seems to be a speculative buy at this point for long-term investors.
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