Conversant Down to Strong Sell on Cautious Outlook - Analyst Blog


Shutterstock photo

On Jul 2, 2014, Zacks Investment Research downgraded Conversant Inc ( CNVR ) 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. ( LPSN ) , Google ( GOOGL ) and LinkedIn ( LNKD ) . While LivePerson sports a Zacks Rank #1 (Strong Buy), Google and LinkedIn have a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

LINKEDIN CORP-A (LNKD): Free Stock Analysis Report

CONVERSANT INC (CNVR): Free Stock Analysis Report

GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report

LIVEPERSON INC (LPSN): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: LNKD , CNVR , GOOGL , LPSN

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by