S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
On Monday, Truist Securities revised its stance on Udemy Inc (NASDAQ:UDMY), downgrading the company’s stock rating from Buy to Hold and adjusting the price target downward to $7.00 from the previous $10.00. The change in rating by Truist Securities reflects concerns regarding Udemy’s business mix and spending on online learning, in light of recent developments including a CEO transition.
The analyst at Truist Securities highlighted the combination of Udemy’s large enterprise and international business mix exposure as factors contributing to the downgrade. This, coupled with the perception of online learning and upskilling as potentially discretionary spending areas, has led to a more cautious outlook on the company’s revenue growth projections. According to InvestingPro data, detailed analysis of market trends and company valuations can help investors make more informed decisions in challenging market conditions.
Truist Securities now anticipates only a 5% growth in enterprise revenue for Udemy by the year 2026, which is notably lower than the approximate 10% growth rate projected by other market analysts. This conservative estimate has resulted in the firm’s revenue and cash flow expectations for Udemy being significantly below the consensus on Wall Street.
Despite Udemy’s shares appearing undervalued at 0.8 times enterprise value to estimated 2026 sales and 6 times enterprise value to estimated 2026 EBITDA, with over $2.30 per share in cash, Truist Securities suggests that there are other investment opportunities that may present less risk. The firm mentioned FIVN and OLO as examples of such opportunities, describing them as "more interesting deep value Buys" with perceived lower-risk setups. FIVN, currently trading at $23, near its 52-week low of $22.09, shows promising indicators with 8 analysts revising earnings upward for the upcoming period. InvestingPro analysis reveals the company maintains a FAIR financial health score of 2.15, with revenue growth of 14.4% in the last twelve months and analysts projecting profitability this year.
In other recent news, Five9 (NASDAQ:FIVN), Inc. has reported that its first-quarter revenue and earnings per share are expected to meet or exceed previous guidance, according to announcements from the company. This comes amid a workforce reduction plan affecting approximately 4% of its employees, aiming for annual savings between $25 million and $30 million. Despite these cuts, analysts from Piper Sandler, Cantor Fitzgerald, and Needham have maintained positive ratings on Five9, with price targets of $53, $36, and $52, respectively. The analysts highlighted the company’s strategic moves, including a focus on artificial intelligence investments and potential revenue growth.
Five9’s management has also indicated that its performance for the first quarter of 2025 is on track to meet or exceed expectations, as outlined in a recent 8K filing. Additionally, Five9 has undergone a board reorganization, with Jonathan Mariner shifting to a Class II director position, as part of efforts to streamline governance. The company is also preparing for its first GAAP profitable year, driven by profitability initiatives and its inclusion in the Google (NASDAQ:GOOGL) Cloud Platform marketplace.
These developments reflect Five9’s strategic efforts to enhance its financial position and operational efficiency amidst challenging market conditions. While the company has not updated its annual guidance, the emphasis on AI and strategic restructuring is seen as a positive trajectory by analysts. The anticipated cost savings and potential revenue growth could bolster Five9’s performance in the coming quarters.
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