On Jul 2, 2014, Zacks Investment Research downgraded
Conversant Inc (
to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Although Conversant reported better-than-expected first-quarter
2014 results, management provided cautious second-quarter outlook
due to bankruptcy of a client, which will hurt its CRM revenues.
For the second quarter of 2014, Conversant expects revenues in the
range of $135.0-$140.0 million, much higher than $128.1 million
reported in the year-ago quarter. The Zacks Consensus Estimate for
the second quarter is expected to be $138.0 million, in line with
the mid-point of the company's guided range.
Conversant forecasts revenues from Affiliate Marketing to be in the
range of $39.0 to $40.5 million. Media revenues are expected to be
in the range of $95.5 to $99.5 million.
Adjusted EBITDA is expected to be in the range of $42.0 to $44.0
million, slightly down from $46.8 million reported in the year-ago
quarter. This remains a concern as higher mix of low-margin mobile
and video revenues will hurt profitability in the near term.
Non-GAAP earnings are expected to be in the range of 34-35 cents
per share, much better than 16 cents reported in the year-ago
quarter. The Zacks Consensus Estimate is pegged at 31 cents.
Moreover, intensifying competition remains a major concern. Ongoing
hiring will also increase operating expenses that will put margin
under further pressure in the near term.
Owing to the present headwinds, analysts remain highly
apprehensive, as is evident from the downward estimate revisions.
Over the last 60 days, the Zacks Consensus Estimate fell 8.7% to
$1.57 per share for fiscal 2014, while the same for fiscal 2015
declined 7.9% to $1.74 per share.
Other Stocks to Consider
Some better-ranked stocks include
LivePerson Inc. (
. While LivePerson sports a Zacks Rank #1 (Strong Buy), Google and
LinkedIn have a Zacks Rank #2 (Buy).
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