On Monday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on SoftwareOne (SWON:SW), reducing the price target to CHF7.50 from CHF18.00 while keeping a Hold rating on the stock. The adjustment follows SoftwareOne's recent ad hoc announcement regarding organizational changes and a revision of its financial guidance for the years 2024 and 2026.
SoftwareOne revealed on Sunday the departure of its CEO, Mr. Duffy, who had been in the role since April 2023. He is succeeded by Mr. Erb, effective today. Alongside this executive change, the company also announced a cut in its financial outlook for the upcoming years.
The revised guidance for 2024 now anticipates a revenue growth of 2-5% in constant currency year over year, a decrease from the previously projected 7-9%. Adjusted EBITDA margins are also expected to be lower, ranging from 21-23% compared to the earlier forecast of 24.5-25.5%. For 2026, SoftwareOne now targets double-digit growth instead of the mid-teens and an adjusted EBITDA margin approaching 27%, which is a reduction from the former goal of 28%.
The company attributed these adjustments to several factors. The new go-to-market strategy, introduced by Mr. Duffy earlier this year, has unexpectedly disrupted sales execution in certain geographies, including North America and parts of EMEA. Additionally, reductions in Microsoft (NASDAQ:MSFT)'s incentives, macroeconomic conditions, and a performance below expectations in the third quarter of 2024 have influenced the company's revised projections.
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