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On Wednesday, Citizens JMP analyst Trevor Walsh reaffirmed a Market Outperform rating and a $6.00 price target for Ribbon Communications (NASDAQ:RBBN), despite the company’s softer-than-expected financial results for the first quarter of 2025. According to InvestingPro data, analyst targets range from $6.00 to $7.50, suggesting significant upside potential. Ribbon Communications reported a slight year-over-year revenue increase to $181.3 million, which fell short of the anticipated $190.8 million. However, the company anticipates a strong first half of 2025, with sales projected to grow by 5%-8% compared to the previous year.
This growth projection is set against the backdrop of reduced revenue from Eastern Europe, which began to decline in the second quarter of 2024. With a revenue growth of 1.91% in the last twelve months and a healthy gross profit margin of 54.3%, Ribbon Communications aims to stay on course to meet its full-year 2025 guidance, notwithstanding deal delays experienced in the first quarter. The company’s sales to service providers saw an increase of over 10% year-over-year, a surge attributed by CEO Bruce McClelland to a concerted effort on network modernization across the board.
Ribbon Communications’ stock has experienced a decline of approximately 18% year-to-date, a contrast to the approximate 5.8% downturn seen in the Russell 3000 index during the same period. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with a "FAIR" overall financial health score. Despite the challenges faced in the first quarter, the company remains confident in its ability to achieve its yearly targets, relying on the strength of its service provider sales and ongoing network modernization initiatives. Discover more insights and 6 additional ProTips for RBBN in the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Ribbon Communications reported its first-quarter 2025 earnings, which did not meet market expectations. The company revealed an earnings per share (EPS) of -$0.03, falling short of the projected $0.02. Revenue was also below expectations, coming in at $181 million compared to the anticipated $194.52 million. Despite a 1% year-over-year increase in revenue, the company’s performance was hindered by a decline in its IP Optical segment, while the Cloud and Edge segment saw a 6% growth. The firm’s adjusted EBITDA decreased by $6 million year-over-year, indicating ongoing challenges. Looking ahead, Ribbon Communications projects revenue for Q2 2025 to be between $210 million and $220 million, with a significant growth forecasted in the Cloud and Edge segment. Analyst firms like B. Riley Securities and Craig Hallum have been engaging with the company, although no specific upgrades or downgrades were mentioned. The company faces potential risks from global supply chain disruptions and economic uncertainties, which could impact future performance.
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