U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
On Wednesday, Needham analysts increased the price target for 8x8 shares (NASDAQ:EGHT) to $3.50, up from the previous target of $3.00, while reiterating a Buy rating on the stock. Currently trading at $2.84, the stock sits between analyst targets ranging from $2.00 to $4.25. The adjustment comes as 8x8 reported third-quarter fiscal year 2025 results that aligned with consensus estimates for revenue and earnings per share (EPS). However, the company slightly lowered its full-year guidance due to anticipated foreign exchange (FX) headwinds.
The legacy Fuze customer base, representing about 5% of service revenue or roughly $9 million, continues to be a challenge for 8x8, with approximately 100 customers yet to migrate. Despite the competitive Unified Communications as a Service (UCaaS) market in the U.S., the company sees a healthier international market, including its lower gross margin Communications Platform as a Service (CPaaS) offering. According to InvestingPro data, the company maintains a healthy gross profit margin of 68% and generates strong free cash flow, despite not being profitable over the last twelve months.
8x8’s management has emphasized that platform bundling is now the primary go-to-market strategy. Additionally, debt servicing remains the key focus for capital allocation within the company. InvestingPro analysis reveals several more key insights about 8x8’s financial health and market position, with additional ProTips available for subscribers. The Needham analysts’ decision to maintain a Buy rating and increase the price target reflects confidence in 8x8’s ongoing balance sheet progress, even though near-term revenue growth is expected to face challenges.
In other recent news, 8x8 Inc . reported notable financial results for the second quarter of fiscal 2025, with service revenue reaching $175.1 million and a non-GAAP operating margin of 11.9%. The company also reduced its total debt by over $173 million since Q2 2023, now standing at $369 million. Mizuho (NYSE:MFG) Securities, however, revised its outlook on 8x8, downgrading the stock from Neutral to Underperform due to concerns over the company’s revenue growth and profitability.
In leadership developments, 8x8 announced the appointment of Joel Neeb as Chief Transformation and Business Operations Officer. Neeb, an established leader in the Software-as-a-Service sector, will oversee the alignment of the company’s customer experience transformation and strategic initiatives with its operational outcomes. Additionally, tech veteran John Pagliuca was added to the 8x8 board, bringing over two decades of leadership experience within the software and SaaS industries.
These are recent developments in the company’s ongoing efforts to strengthen its leadership team and strategic direction. The company expects to complete customer upgrades from the Fuze platform by the end of 2025 and maintains a cautiously optimistic outlook for future growth.
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