On Monday, Morgan Stanley (NYSE:MS) downgraded Docebo Inc (TSX:DCBO). (NASDAQ:DCBO) stock from Overweight to Equalweight and reduced its price target to $32 from $41. The shift in rating comes as the firm observes a consistent deceleration in the company’s revenue growth trends and notes customer downsizing, which could be further impacted by potential new macroeconomic headwinds. According to InvestingPro data, the stock has already declined over 16% in the past week and is currently trading near its 52-week low of $26.
The analysis by Morgan Stanley highlighted concerns over Docebo’s growth trajectory, which has become unclear due to these factors. While the company maintains impressive gross profit margins of 80.66% and achieved revenue growth of 16.79% over the last twelve months, the firm’s previous investment thesis for Docebo, which anticipated stabilizing subscription revenue growth and a possible acceleration due to progress in the market, has not materialized as expected.
Morgan Stanley’s commentary on the downgrade emphasized the observed deceleration in growth trends for Docebo. The analysts pointed out that this slowdown occurred even before considering the effects of any new macroeconomic challenges that might arise. This suggests that the issues facing Docebo may not be solely attributed to broader economic factors but could also be related to the company’s internal dynamics and market position. InvestingPro analysis shows that despite these challenges, the company maintains a GOOD financial health score, with 15+ additional insights available to subscribers.
The new price target of $32 reflects Morgan Stanley’s adjusted expectations for Docebo’s stock performance, marking a significant decrease from the previous target of $41. The firm’s analysts have expressed caution due to the lack of clarity on how Docebo will navigate the current market environment and achieve growth. For a comprehensive analysis of Docebo’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.
In summary, Morgan Stanley has revised its stance on Docebo Inc ., moving to a neutral Equalweight rating from a previously bullish Overweight position. The firm has also set a lower price target for the company’s shares, taking into account the recent deceleration in growth and potential future economic uncertainties that could affect Docebo’s business.
In other recent news, Docebo Inc. reported its first-quarter 2025 earnings, surpassing earnings per share (EPS) expectations with a reported $0.27 per share, slightly above the forecasted $0.26. However, the company experienced a revenue shortfall, reporting $57.3 million, which fell short of the anticipated $58.59 million. Despite the revenue miss, Docebo’s stock saw a positive premarket movement, attributed to the company’s strategic updates and innovations in AI-driven learning solutions. The company also revised its full-year revenue growth guidance to 9-10%, down from previous expectations, reflecting ongoing challenges in macro-sensitive markets. Additionally, Docebo announced leadership transitions with the departure of key roles, including the Chief Revenue Officer and Chief Product Officer, as part of a broader strategic realignment. The company reassured investors about the strength of its partnership with AWS, despite AWS’s decision not to renew one of its contracts post-2025. On the analyst front, firms like Stifel and Canaccord Genuity engaged with Docebo during the earnings call, focusing on the company’s strategic direction and market challenges. These developments highlight Docebo’s focus on innovation and strategic adaptation amidst a challenging economic environment.
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