Synchronoss shares target raised to $11 on operational stability

On Wednesday, Roth/MKM adjusted its outlook on Synchronoss Technologies (NASDAQ:SNCR), a cloud computing and messaging company, by increasing the price target to $11.00 from the previous $4.05. The firm has maintained a Neutral rating on the stock.

The revision follows Synchronoss Technologies' second-quarter financial results, which reported revenues of $43.5 million. This marks a 5.9% year-over-year increase when excluding divested revenues and a 1.1% rise from the previous quarter, aligning with forecasts. Notably, the company's adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) reached $13.0 million, surpassing the estimated $10.5 million.

The analyst from Roth/MKM highlighted the company's effective cost controls as a positive factor contributing to the higher AEBITDA. Additionally, the firm noted that Synchronoss Technologies has benefited from some debt refinancing efforts.

Despite these improvements, the analyst pointed out that Synchronoss Technologies' profit and loss statement would continue to face pressures due to the costs associated with software capitalization and interest burdens. The increased price target to $11.00 reflects a recognition of the company's operational stabilization and improved sustainability prospects.

In other recent news, Synchronoss Technologies demonstrated a strong performance in Q2 of 2024. The company's revenue saw a 5.9% year-over-year increase to $43.5 million, driven by significant cloud subscriber growth and improved adjusted gross margins. Net income rose to $780,000, marking an $11 million increase from the previous year. Further developments include a strategic partnership with Verizon (NYSE:VZ) and the appointment of a new country manager for Japan.

Synchronoss Technologies anticipates 5-8% revenue growth for 2024, with adjusted gross margins expected to remain above 75%. Despite higher litigation and remediation costs, the company forecasts a positive cash flow trajectory for the remainder of the year, anticipating at least $10 million in net cash flow. Synchronoss also plans to use part of an anticipated $28 million federal tax refund to prepay a portion of their term loan.

InvestingPro Insights

Following the revised outlook by Roth/MKM, current InvestingPro data and insights provide a deeper understanding of Synchronoss Technologies' (NASDAQ:SNCR) financial health and market position. As of the last twelve months leading up to Q2 2024, the company has shown a robust gross profit margin of 75.9%, indicating efficient cost management relative to its revenue, which stands at $167.62 million. This aligns with the positive view of the company's cost controls mentioned by Roth/MKM.

Despite not being profitable over the last twelve months, analysts predict that Synchronoss will turn a profit this year. The market has responded favorably to these prospects, with a significant 66.5% price uptick over the last six months and a year-to-date price total return of 63.29%. The market cap of Synchronoss is currently $115.23 million, and while the price-to-earnings (P/E) ratio is negative, indicating losses, the strong recent return could signal investor confidence in the company's turnaround potential.

For those seeking to explore further, InvestingPro offers additional insights, including a total of 9 InvestingPro Tips for Synchronoss Technologies, which can be found at InvestingPro. These tips provide valuable information for investors considering the company's stock, such as valuation implications and performance predictions.

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