Synchronoss Technologies, Inc. (OTCMKTS:SNCR) is trying to make a comeback after shedding more than 40% in market value from this year’s highs, and on turning bearish two years ago. The stock sentiments in the market took a hit on brokerage firm Stifel downgrading the stock form a hold to a sell and consequently lowering share price target for $8 to $3 a share.
Synchronoss Technologies Price Action
A wider than expected net loss in the second quarter is another issue that appears to have spooked investors. Declining revenues primarily in the recent quarter all but continue to raise concerns about the company’s long-term growth.
However, the stock has started showing signs of bouncing back as investors continue to take note of a positive outlook for the second half of the year. The appointment of a new Chief Financial Officer could as well have reignited hope that the company is working behind the scenes to turnaround its fortunes.
Since the start of August, the stock has rallied by more than 10% and is currently flirting with the $6 a share handle. Above $6 a share, the stock remains well positioned to continue powering high to the $7.20 mark, seen as the next substantial resistance level.
A rally followed by a close above the $7.20 mark should mark the end of the bear run that has plagued the stock for the better of the year. Above $7.20 and on strong upside momentum the stock should be on its way to this year’s highs of $12 a share.
About Synchronoss Technologies
Synchronoss Technologies is a provider of cloud messaging and Internet of things platforms. The company strives to transform the way companies create new revenue and reduce costs of operations by deploying cloud digital and IoT products. It markets and sells its product and services through direct sales force and strategic partners.
Synchronoss Technologies finds itself in a tight spot on missing expectations with recent financial results. For the second quarter, the company posted a wider than expected net loss of (-$47.3 million), compared to (-$26.6 million) reported a year ago. Total revenue dropped to $76.7 million from $119 million posted a year earlier.
According to the Chief Executive Officer Glenn Lurie, they made substantial progress in the quarter in returning the company on a path to long-term growth. Focus going forward will be on delivering platforms that will allow clients to deliver compelling digital, cloud messaging and IOT experiences to customers.
“We believe we will begin delivering substantial improvements in our financial results in the second half of 2018. We currently expect revenue to grow sequentially in the second half of the year and that we will generate adjusted EBITDA profitability and positive free cash flow for the second half,” Lurie in a statement.
Synchronoss Technologies has also moved to strengthen its executive hierarchy with the appointment of David Clark as the Chief Financial Officer. He joins the company with over 20 years’ experience in management, that the company hopes to leverage as it looks to bounce back after a slow to start to 2018.
According to the Chief Executive Officer, Clark’s deep domain, financial forecasting, and capital markets experience should be of great value as Synchronoss Technologies moves to execute on strategic priorities.
“We have a clearly defined plan in place that we believe will enable Synchronoss to once again deliver strong top-line growth and meaningful profitability. I look forward to partnering with Glenn and the entire Synchronoss team to successfully execute on these objectives,” said Mr. Clark.
What Next for Synchronoss Technologies
Synchronoss Technologies has not had the best of runs over the last two years having suffered a string of setbacks from a botched acquisition to the abrupt resignation of a newly appointed CEO. Disastrous financial results have all but continued to rattle investors arousing concerns as to whether the company is crumbling under competition pressure.
Since touching record highs of $50 a share two years ago, the stock has turned bearish and continued to edge lower on waning investor confidence. However, have started looking up in what appears to be a turnaround on operational efficiency as well as long-term prospects.
The management team has affirmed that they expect revenue to grow sequentially heading into the year-end with cash flow also expected to edge higher. According to Mr. Lurie, topline growth and substantial profitability are what investors should expect going forward.
Investors have reacted positively to the positive outlook and consequently pushed the stock up the charts. The stock needs to rise and stabilize above the $7 a share mark, for investors to consider it a long-term play after the steep bear run.
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Disclosure: We have no position in SNCR and have not been compensated for this article.