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On Monday, Cantor Fitzgerald reaffirmed its Overweight rating and $36.00 price target for Five9, Inc (NASDAQ:FIVN), following the company’s recent workforce reduction announcement. The stock, currently trading at $25.24, has declined nearly 38% year-to-date, though InvestingPro data shows 8 analysts have recently revised their earnings estimates upward for the upcoming period. In an 8K filing released after-market on Sunday, Five9 disclosed a reduction in force (RIF) that is expected to affect approximately 4% of its employees, which equates to an estimated 120 positions based on the company’s reported headcount of 3,073 in its annual filing.
The majority of these job cuts are anticipated to be finalized by the end of the second quarter of 2025. Cantor Fitzgerald estimates that these measures will generate around $25 million in annual run-rate savings, accounting for roughly 5% of their projected operating expenses for the calendar year 2025. Despite these savings, analysts at Cantor suggest that Five9 is likely to continue investing heavily in artificial intelligence, potentially reallocating the savings to other costs. Consequently, the firm has decided not to adjust its current estimates.
In the same 8K document, Five9’s management indicated that its performance for the first quarter of 2025 would meet or exceed the previously issued guidance on February 20, 2025. This guidance included projections for revenue, as well as GAAP and non-GAAP earnings per share.
Cantor Fitzgerald’s analysis suggests that with the stock’s valuation currently below 2 times the next twelve months’ (NTM) revenues, there is a 36% upside potential. Their price target is based on 2.25 times their calendar year 2026 revenue estimate, noting that Five9’s shares are trading at a significant discount compared to other software industry peers. This view aligns with InvestingPro’s Fair Value analysis, which indicates the stock is currently undervalued. With the stock trading near its 52-week low of $24.70 and showing oversold conditions, investors seeking detailed analysis can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Five9, Inc. has announced several significant developments. The company expects to meet or exceed its first-quarter 2025 revenue guidance, with anticipation of revenues surpassing projections. This comes alongside a workforce reduction plan approved by the board, aiming to cut approximately 4% of its workforce, leading to estimated annual savings of around $20 million. In terms of analyst activity, Needham has maintained a Buy rating with a price target of $52, while Rosenblatt Securities has increased its price target to $58, citing strong fourth-quarter results with a 16.6% year-over-year revenue growth.
Five9 has also undergone changes in its executive team, with Andy Dignan promoted to President and Bryan Lee appointed as interim CFO following the retirement of Barry Zwarenstein. The company has reshuffled its board of directors, with Jonathan Mariner moving to Class II, and Maria Walker set to become chair of the Audit Committee. Five9’s AI initiatives have shown promising results, contributing significantly to its revenue, and the company has achieved a 100% attach rate on new deals exceeding $1 million in annual recurring revenue.
These developments reflect Five9’s strategic focus on growth and operational efficiency, with the company poised for potential financial improvement in the coming quarters.
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