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Investing.com - Barclays downgraded EverCommerce Inc (NASDAQ:EVCM) from Equalweight to Underweight on Tuesday, while setting a price target of $11.00. According to InvestingPro data, the company currently trades at $11.05, with analyst targets ranging from $8.50 to $15.00.
The downgrade comes as Barclays cited three key concerns about the vertical SaaS provider that serves small and medium-sized businesses (SMBs). Despite a broader recovery in the SMB market, EverCommerce has experienced slowing revenue growth and declining retention rates, which Barclays noted is "uncharacteristic" compared to other companies in its vertical SaaS coverage. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 2.37, though analysts anticipate sales decline in the current year.
Barclays also highlighted ownership concentration as a potential issue for investors, noting that private equity firms PSG and Silver Lake control more than 80% of EverCommerce shares. This significant ownership stake "could be an overhang that could limit float and liquidity" in the stock.
The investment bank has shifted its valuation methodology for EverCommerce to an enterprise value to free cash flow (EV/FCF) approach. At 19x EV/FCF, Barclays acknowledges the valuation is "neither cheap nor expensive."
Barclays concluded that it does "not see a clear catalyst that warrants a rerating" of the stock, supporting its decision to downgrade EverCommerce to Underweight.
In other recent news, EverCommerce Inc. reported notable developments that could interest investors. The company recently completed the acquisition of ZyraTalk, an AI-powered customer engagement platform, to enhance its service offerings, particularly in its Home & Field Services vertical, EverPro. This strategic move is expected to eventually benefit other service sectors within the company. In financial updates, EverCommerce exceeded expectations in its second-quarter earnings, with revenue surpassing forecasts by $2 million and EBITDA coming in $4.5 million above projections, as noted by Piper Sandler, which subsequently raised its price target for the company to $10 while maintaining a Neutral rating.
Additionally, EverCommerce has made significant strides in managing its financial obligations by refinancing its $529.4 million term loan facility. The company extended the maturity of its Term B-2 Loans to July 6, 2031, and reduced the interest rate by 25 basis points. This move was accompanied by an amendment to its existing credit agreement, which further solidified its financial standing. These recent developments reflect EverCommerce’s proactive approach to enhancing its service offerings and optimizing its financial structure.
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