What happened
Shares of E2open Parent Holdings (ETWO +0.00%) were down 42.6% this week as of Friday's close, according to data provided by S&P Global Market Intelligence, after the company announced weak quarterly results, lowered its forward guidance, and replaced its CEO.
NYSE: ETWO
Key Data Points
So what
To be sure, the entirety of E2open's plunge this week came on Wednesday after its fiscal second-quarter report (ended Aug. 31, 2023) hit the wires. While the company's adjusted earnings of $0.04 per share were roughly in line with expectations, its quarterly revenue of $158.5 million missed estimates by around $1.5 million.
That modest revenue miss wasn't as concerning, however, as the simultaneous news that E2open's board of directors and CEO Michael Farlekas have mutually agreed a leadership change was in order; Farlekas stepped down as CEO effective immediately, and the company appointed current advisory board member Andrew Appel as interim CEO while it commences a search for a permanent replacement.
Meanwhile, E2open CFO Marje Armstrong stated the company's "growth rate remained below [its] potential." Armstrong added that while the company has already begun efforts to reaccelerate growth and improve its go-to-market performance, those efforts will likely take several quarters to yield fruit. As such, E2open reduced its full-year guidance, calling for revenue of $625 million to $635 million (down from $655 million to $670 million previously).
Now what
Perhaps predictably, several Wall Street analyst firms downgraded E2open stock in response; on Wednesday, Bank of America lowered its per-share price target from $6 to $5, and Craig-Hallum reduced its per-share prediction to $4 from $5. On Thursday, Redburn Atlantic followed by lowering its rating on E2open to neutral from buy, slashing its per-share target to just $4 from $8.50.
E2open stock did recoup some of its post-earnings drop with a 16% rebound on Thursday -- a likely indication that the nearly 50% haircut it took on Wednesday was overblown. Still, before I'd be willing to tap that buy button with this beleaguered supply chain software stock, I'm inclined to wait until the underlying business shows more tangible signs of sustained improvement in the coming quarters.
