Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Synchronoss Technologies Inc. Slumped Again Today

By Timothy Green - Feb 4, 2016 at 11:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst downgrade could be contributing to the decline, with investors punishing the stock for a second day following earnings.

What: Shares of Synchronoss Technologies (SNCR 0.60%) slumped for a second day on Thursday following the company's fourth-quarter earnings report. On Wednesday, shares plunged by about 10%, driven by disappointing guidance for the first quarter. Soon after the market opened on Thursday, the stock fell another 24%, carving out a new 52-week low. At 11 a.m. ET Thursday, it had regained some ground, down just 12.5%.

So what: Synchronoss managed to beat analyst estimates for both revenue and earnings during the fourth quarter, posting 20.7% year-over-year revenue growth and a sizable jump in non-GAAP profits. However, the company guided for first-quarter revenue in a range of $142 million to $147 million, well below analyst expectations of $156.3 million. Non-GAAP EPS guidance also came up short, with a range of $0.44 to $0.50 missing expectations of $0.55.

Synchronoss did catch an analyst downgrade on Thursday, which could be contributing to the decline in the stock price. Stifel Nicolaus lowered its rating on Synchronoss from "buy" to "hold," citing concerns that the quality of the company's cloud revenue is lower than it appears. It believes that Synchronoss' joint venture with Verizon contributed at least $18 million in one-time cloud revenue, boosting the company's results during the fourth quarter.

Now what: It's been a rough couple of days for Synchronoss shareholders, with disappointing guidance and an analyst downgrade weighing on the stock. In the long run, CEO Stephen Waldis expects new initiatives to lead to growth, but at the moment, the market is focused on the short-term problems facing the company.

Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Synchronoss Technologies. The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Synchronoss Technologies, Inc. Stock Quote
Synchronoss Technologies, Inc.
SNCR
$1.68 (0.60%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
403%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.