On Thursday, Citi updated its stance on Sprinklr Inc (NYSE:CXM), increasing the price target to $10 from the previous $9 while keeping a Neutral rating on the stock. The company's recent performance surpassed modest expectations, showing improvements in key metrics, particularly in subscription revenue trends, with a notable 5.24% stock price gain over the past week.
Despite this, there was a noted weakness in billings, which declined 23% sequentially and 8% year-over-year. According to InvestingPro data, the company maintains strong fundamentals with a healthy balance sheet, holding more cash than debt.
Sprinklr's fourth-quarter guidance for fiscal year 2025 was revised upwards, and its operating income was also poised to exceed expectations, discounting one-time charges. This indicates some level of stability in the company's performance, supported by a solid gross profit margin of 74.22% and positive earnings of $0.17 per share in the last twelve months.
Nonetheless, the current demand environment remains lukewarm, and there are concerns about the potential impact of ongoing budgetary and consolidation pressures on the company's premium-priced core offerings.
The firm's outlook for fiscal year 2026 and beyond remains largely unchanged, despite factoring in the modest third-quarter beat and the raised fourth-quarter forecast. The revised price target of $10 reflects an application of higher regression inputs and is based on a valuation of 2 times calendar year 2026 revenue. This is compared to the approximately 4 times revenue valuation of Sprinklr's small-cap peers. InvestingPro analysis indicates that Sprinklr is currently trading at high earnings and EBITDA multiples, with a P/E ratio of 46.33. Discover more valuable insights and 10+ additional ProTips with an InvestingPro subscription.
Citi's assessment comes as Sprinklr transitions under the leadership of new CEO Rory Read, whose strategies for fiscal year 2026 are anticipated. The firm's current position on Sprinklr is described as Neutral/High Risk, indicating caution amid the company's evolving circumstances. With analyst targets ranging from $6 to $17, investors seeking deeper insights can access the comprehensive Pro Research Report available exclusively on InvestingPro.
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