What happened

Shares of cloud software company 8x8 Inc. (NYSE:EGHT) slumped on Monday due to an analyst downgrade. This comes a few months after the company was reported to be exploring a sale, which prompted to stock to surge. As of 3:26 p.m., 8x8 stock was down 11.3%.

So what

Investment bank William Blair downgraded shares of 8x8 to market perform, down from a previous rating of outperform. This rating lines up with Morgan Stanley, which initiated the stock at equal-weight in April. The downgrade may have something to do with the stock being up considerably over the past few years.

EGHT Chart

EGHT data by YCharts

8x8, which specializes in cloud-based communications services, is a fast-growing company that was profitable until recently. It has posted a net loss of $3 million over the past twelve months, but achieved a six-year streak of profitability prior to 2016. The stock has surged despite these losses due to its consistent double-digit revenue growth.

This downgrade could be a sign that William Blair does not see the company being acquired as likely. Reuters reported in February that 8x8 was exploring a sale, but no further developments have surfaced since.

The 8x8 logo.

Image source: 8x8 Inc.

Now what

8x8 last reported earnings in January, beating analyst expectations across the board. The next report should come in late May, assuming the company maintains its reporting schedule from last year. 8x8 has yet to confirm the date.

Analyst upgrades and downgrades are usually nothing to get worked up about. As always, investors should do their own homework when considering buying a stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.