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On Monday, Sapiens International Corp. NV (NASDAQ:SPNS) experienced a change in its stock rating and price target as Jefferies downgraded the company from Buy to Hold. The new price target set by Jefferies is $28.00, a decrease from the previous $28.00. The firm explained that the year 2025 is looking to be more difficult than initially expected, with organic growth projections falling to low single digits. According to InvestingPro data, four analysts have recently revised their earnings estimates downward, while the stock has fallen significantly over the past three months, with a -22.79% six-month return.
The downgrade comes as Sapiens, a provider of specialized insurance software and services, faces a lackluster performance in the North American Property and Casualty (P&C) insurance sector. Despite significant investments over the past few years, the company has not gained traction due to industry-wide challenges. Additionally, the European market presents its own set of difficulties, influenced by macroeconomic factors.
Jefferies has also adjusted its adjusted earnings per share (EPS) estimate for Sapiens in 2025 to $1.42, which sits notably below the consensus estimate of $1.50. This revision reflects the firm’s tempered expectations for the company’s financial performance.
The downgraded rating and reduced price target suggest that Jefferies sees limited upside potential for Sapiens stock in the near term. This reassessment by Jefferies may influence investor sentiment and could be a factor in the stock’s market performance going forward.
In other recent news, Sapiens International Corporation reported a 4.8% year-over-year increase in Q3 2024 revenue, reaching $137 million. Despite this growth, the company revised its full-year 2024 revenue guidance downward due to a strategic shift towards a Software (ETR:SOWGn) as a Service (SaaS) model and longer sales cycles, particularly in Europe. Needham maintained a Buy rating on Sapiens’ shares but reduced the price target to $35 from the previous $44 following these results.
Furthermore, Sapiens has integrated its solutions with the Microsoft (NASDAQ:MSFT) Azure Marketplace, allowing its global customer base to utilize Azure’s cloud services to enhance their business operations. This move is part of Sapiens’ commitment to delivering advanced automation and AI-powered solutions to the insurance sector.
Finally, Sapiens announced new business wins in North America and successful upgrades with existing customers like Pan American Life Insurance (NSE:LIFI) Group and Hollard Group. The company’s gross profit reached $63 million, with a gross margin of 45.8%, and the net income attributed to shareholders was $21 million. These are recent developments for Sapiens International Corporation.
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