William Blair Keeps Their Hold Rating on 8X8

By Ryan Adsit

In a report issued on July 28, Dmitry Netis from William Blair maintained a Hold rating on 8X8 (NASDAQ: EGHT). The company’s shares closed on Friday at $12.70.

Netis said:

“We argued (with our recent downgrade) that based on tough comps and slowing bookings growth from the midmarket/enterprise segment, the company will either need to lower its service revenue growth projections or step up its operating expenses to achieve the magic number (investor expectations) of 20% growth for fiscal 2018. 8×8 has chosen the latter by planning to significantly ratchet up R&D and sales and marketing spending over the next three quarters. It appears the company is attempting to augment its go-to-market strategy amid what we believe is growing competition from both public and small private UCaaS players. According to management, channel is the fastest growing segment at roughly 80%, with 6 out of the top 10 deals in the quarter coming from it. Most of the incremental spending will focus on building out the channel. Management will need to grapple, however, with high channel acquisition costs and sales commissions, which according to our field surveys continue to rise. Case in point, sales commissions to the channel exceeded management expectations this quarter. Given new guidance, we are modeling operating expenses to grow 28% year-over-year in fiscal 2018 and 17% in 2019, while we model revenue to grow 16% in both years.”

According to TipRanks.com, Netis is a 4-star analyst with an average return of 4.3% and a 54.7% success rate. Netis covers the Consumer Goods sector, focusing on stocks such as Acacia Communications, Juniper Networks, and Arista Networks.

Currently, the analyst consensus on 8X8 is Moderate Buy and the average price target is $17, representing a 33.9% upside.

In a report issued on July 28, Craig-Hallum also downgraded the stock to Hold with a $15 price target.

The company has a one year high of $16.80 and a one year low of $10.30. Currently, 8X8 has an average volume of 869.3K.

Based on the recent corporate insider activity of 30 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of EGHT in relation to earlier this year. Earlier this month, Puneet Arora, the SVP Global Sales of EGHT bought 11,101 shares for a total of $161,520.

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8×8, Inc. operates as a business cloud communications industry, which engages in the provision of development and use of Internet protocol voice, video, and data communication technologies. It operates through the following geographical segments: Americas, Europe, and Asia Pacific. It aso offers a SaaS (Software as a Service) communication solution.