Why BroadSoft's Shares Flopped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of BroadSoft (Nasdaq: BSFT  ) fell as much as 18% today after reporting underwhelming revenue figures, though beating expectations for earnings per share. The company's forward guidance was also disappointing.

So what: BroadSoft's third-quarter revenue came in $1.3 million below the consensus estimate of $41.5 million, but its adjusted EPS results, at $0.35, beat the Street by 3 cents. However, fourth-quarter projections of $43 million to $48 million in revenue come in at the midpoint of analyst expectations of $45.9 million, and EPS projections of $0.33 to $0.48 are on the low side of the $0.43 consensus.

For the full year, revenue projections between $162 million and $167 million look weak compared with Wall Street's expectation of $166.3 million, although adjusted EPS guidance of $1.30 to $1.45 was reasonable in light of the Street's EPS expectations of $1.37.

Now what: BroadSoft's stock isn't cheap at a 51 P/E, even after this big drop, and investors seem to be waking up to the possibility that the company's growth may be slowing. However, analysts at both William Blair and Needham view today's drop as a possible buying opportunity. In its earnings call, BroadSoft pointed to macroeconomic uncertainty (a topic that seems to pop up in almost every underwhelming report) as the source of its wide guidance range, which colors this as a slightly more speculative stock than it may have been in the recent past. I'd stay on the sidelines and watch for greater clarification on just how big an impact this "macroeconomic uncertainty" will have.

Want more news and updates? Add BroadSoft to your Watchlist now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2098832, ~/Articles/ArticleHandler.aspx, 10/26/2014 12:42:22 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement