Goldman Sachs cuts E2open stock target to $2.10, keeps sell rating

Published 30/04/2025, 11:16
Goldman Sachs cuts E2open stock target to $2.10, keeps sell rating

On Wednesday, Goldman Sachs made an adjustment to E2open Parent Holdings’ (NYSE:ETWO) financial outlook, with analyst Adam Hotchkiss setting a new price target of $2.10, down from the previous $2.30, while reaffirming a Sell rating on the company’s stock. The revision comes as the stock has declined over 56% in the past year, though InvestingPro data suggests the company may be undervalued based on its Fair Value analysis. The revision follows E2open’s fourth-quarter fiscal year 2025 report, which showed the company’s subscription revenue slightly surpassing Goldman Sachs and consensus estimates. Despite this, overall revenue of $607.7 million matched expectations and the fiscal year 2026 guidance was in line with Goldman Sachs’ projections prior to the report. InvestingPro analysis reveals the company maintains a healthy gross profit margin of 65.2%, though it currently operates at a loss with a negative return on equity.

E2open’s efforts to stabilize customer churn were acknowledged by the analyst, who noted incremental progress. However, Hotchkiss expressed skepticism regarding the company’s ability to achieve significant growth solely through improvements in churn. He pointed out that while the commitment to additional investments in growth initiatives is promising, the combination of these investments with a tough operating environment and the extended time required to realize value from E2open’s software products makes it difficult to expect a near-term return on investment.

Hotchkiss further elaborated that the management’s focus on improving customer retention, reducing debt, and enhancing the company’s ability to cross-sell is appropriate for E2open’s long-term success. Nonetheless, he indicated that evidence of a return to growth beyond low single-digit figures is needed, particularly in a market that is currently less conducive to larger deals.

In conclusion, the Goldman Sachs analyst maintained a cautious stance on E2open, waiting for clear indicators of growth before altering the Sell rating. The new 12-month price target of $2.10 reflects these concerns and the challenges faced by the company in the current business climate. For investors seeking deeper insights, InvestingPro offers comprehensive analysis including additional ProTips and a detailed Pro Research Report, which provides actionable intelligence on E2open’s valuation, financial health, and growth prospects.

In other recent news, E2open Parent Holdings Inc. announced its fourth-quarter earnings for fiscal year 2025, reporting an earnings per share (EPS) of $0.06, which surpassed analyst expectations of $0.05. The company’s revenue slightly missed forecasts, coming in at $152.7 million against the anticipated $153.01 million, marking a 3.6% decline year-over-year. Despite the revenue shortfall, E2open’s stock experienced an 8.57% increase in aftermarket trading. The company has also introduced new AI tools and enhanced customer service metrics, which may have contributed to positive investor sentiment. Looking forward, E2open’s guidance for fiscal year 2026 suggests a return to positive growth, with anticipated subscription revenue between $525 million and $535 million. The company is focusing on client retention and gradual improvement in growth rates. Additionally, E2open maintained a strong adjusted EBITDA margin of 36.9%, demonstrating operational efficiency. Analysts have noted the company’s strategic investments in product and sales capabilities as potential drivers for future growth.

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