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On Friday, BofA Securities adjusted its stance on Informatica (NYSE: INFA), downgrading the stock from Buy to Neutral and slashing the price target to $20.00 from the previous $35.00. The revision comes in response to Informatica's fourth-quarter 2024 performance and a cautious outlook for 2025. According to InvestingPro data, the company maintains impressive gross profit margins of 80.35% and currently trades at $17.41, suggesting potential upside based on InvestingPro's Fair Value analysis.
BofA Securities analysts cited several reasons for the downgrade, including execution challenges related to customer renewals, revenue sensitivity, the strategy of pushing professional services to partners, and foreign exchange headwinds. These factors have contributed to a 2025 revenue forecast that falls 5% short of consensus estimates. The company's recent revenue growth stands at 2.81%, with InvestingPro analysis revealing over 10 additional key insights about Informatica's financial health and growth prospects.
Despite acknowledging Informatica's status as a proven enterprise-class solution with potential long-term benefits from AI technology, BofA Securities expressed concern over the company's operational issues. They noted that while Informatica is working to address these challenges, it may take several quarters for the improvements to be reflected in the company's financial fundamentals.
The analysts also remarked on Informatica's unlevered free cash flow (uFCF) multiple, which is currently at a discount and provides some downside protection. However, they believe that the stock's risk/reward profile is balanced at this time, and they recommend a neutral stance until there is more predictability in the company's business model.
In other recent news, Informatica has been the subject of several analyst revisions following its fourth-quarter earnings report. The data management company posted adjusted earnings per share of $0.41, surpassing the consensus forecast of $0.38. However, revenue for the quarter came in at $428.3 million, significantly below the $456.86 million analysts were expecting. This revenue miss was attributed to lower renewal rates and shorter durations of self-managed subscriptions, causing a roughly $46 million year-over-year reduction in upfront revenue recognition.
Informatica also experienced a downgrade from Baird analysts due to concerns over visibility, shifting the stock from Outperform to Neutral. The firm also cut the price target to $19.00 from the previous $35.00, following a reported decline in Q4 results and weaker renewals within both the on-premise and cloud segments of the business.
In addition, Cantor Fitzgerald lowered its price target for Informatica to $18.00 from the previous $29.00, while maintaining a Neutral rating on the stock. This revision was prompted by Informatica's recent performance in cloud modernization deals and the impact of changes in contract renewal terms on revenue.
Finally, Truist Securities also adjusted its price target on Informatica shares, bringing it down to $24 from the previous $34, while keeping a Buy rating on the stock. This followed a challenging fourth quarter for the company, with performance and guidance for 2025 falling short of expectations.
These are among the recent developments impacting Informatica.
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