U.S. stock futures slip lower; Cook’s firing increases Fed independence worries
On Friday, Oppenheimer analyst Brian Schwartz revised the price target for Sprout Social Inc . (NASDAQ: NASDAQ:SPT) shares, reducing it to $32.00 from the previous $38.00. Despite this change, the firm maintains an Outperform rating on the company’s stock. The revision comes as the stock has fallen significantly, with year-to-date returns of -29%, currently trading at $21.81. According to InvestingPro analysis, the stock appears undervalued at current levels.
Schwartz’s evaluation of Sprout Social’s first-quarter performance highlighted both strengths and weaknesses. On the positive side, the company achieved record margins, maintaining an impressive gross profit margin of 77.6%, and cash generation, as well as improved predictability in its operations. However, concerns were raised regarding the deceleration of business growth, as indicated by the mid-single-digit growth in the first-quarter billings metrics, though revenue still grew 17.8% year-over-year. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes detailed analysis of the company’s financial health and growth prospects.
The analyst also noted that Sprout Social’s management has adopted a cautious stance in their guidance, choosing not to fully incorporate the first-quarter’s positive results into their future outlook. This conservative approach is seen as a response to the current macroeconomic pressures, suggesting a softer outlook compared to the situation 90 days prior. While the company isn’t currently profitable, InvestingPro data indicates analysts expect profitability this year.
Despite the lowered price target, Schwartz believes that the risks associated with Sprout Social’s estimates are reduced for the current year. He also pointed out that valuation multiples for the company have mostly bottomed out. In conclusion, Schwartz stated, "Bottom Line: In our view, management is doing a good job of delivering solid margin growth and cash flow in a challenging operating environment. Maintain Outperform rating on valuation. Lower PT to $32 from $38." This aligns with the current Fair Value assessment from InvestingPro, suggesting potential upside from current levels.
In other recent news, Sprout Social Inc. reported a strong financial performance for the first quarter of 2025. The company achieved a total revenue of $109.3 million, marking a 13% increase compared to the previous year. Sprout Social also recorded a non-GAAP operating margin of 11.5%, which is a notable improvement of 500 basis points from the prior year. Additionally, the company reported a non-GAAP free cash flow of $19.5 million, representing a 72% year-over-year growth. The earnings per share (EPS) and revenue forecasts were closely aligned with the actual results, with revenue slightly below the forecast but still reflecting strong financial health.
Analysts have shown a favorable outlook, as Sprout Social provided guidance for Q2 revenue to be between $110.4 million and $111.2 million and raised its full-year 2025 revenue guidance to a range of $448.9 million to $453.9 million. The company continues to expand its enterprise solutions and has landed strategic wins with global brands, demonstrating its strong market positioning. Sprout Social’s strategic initiatives, including the introduction of AI-powered products, have been highlighted as key growth drivers. The company’s focus on expanding its enterprise pipeline and customer retention is seen as a positive sign for future growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.