What happened
Shares of LivePerson (NASDAQ: LPSN) jumped on Thursday after the cloud-based software company received positive analyst coverage. This move higher comes after a steep drop in early November following its third-quarter report. At 12:15 p.m. EST, LivePerson stock was up about 10%.
So what
Analysts at B. Riley initiated coverage on LivePerson on Thursday, assigning the stock a "buy" rating. B. Riley set its price target on the stock at $16.50, well above the $11.05 closing price on Wednesday. That price target would represent a new 52-week high.
This positive analyst opinion comes less than two months after shares of LivePerson sank following its third-quarter report. LivePerson reported revenue of $56.5 million, slightly above the average analyst estimate, and non-GAAP EPS of $0.05, in-line with estimates. The company also raised its revenue guidance for the full-year.
Despite a generally positive report, the stock slumped. One reason could be valuation. At around $14 per share, the stock price prior to the report, LivePerson was valued at 3.5 times sales. The company has reported a GAAP net loss in each of the past four years, and it doesn't expect that to change in 2017.
Now what
This analyst upgrade helped the stock regain some lost ground, but LivePerson is going to need to return to profitability and grow revenue at a faster rate to justify its pre-earnings valuation. B. Riley seems to think that the company's results will improve, based on its lofty price target. And investors, at least today, seem to agree.
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends LivePerson. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
