Informatica's (INFA) stock holds limited upside in the medium term after the software development company reported a "messy/confusing" Q4, missing expectations on most metrics except unlevered free cash flow, RBC Capital Markets said in a note Friday.
Management cited sales execution issues and increased cloud modernization activity as key factors weighing on renewal rates, while revenue also suffered from shorter on-premise contract terms, soft professional services demand, and currency headwinds, the investment firm said.
The company expects these challenges to persist into 2025, prompting lower guidance across the board, according to the note.
While downside risk for the stock also appears limited at current multiples, RBC analysts said the company needs to demonstrate "improved execution and forecasting," over the next few quarters to win back investor confidence.
RBC downgraded the company's stock to sector perform from outperform and cut its price target to $19 from $35.
Shares of the company were down over 30% in recent trading.
Price: 17.57, Change: -7.61, Percent Change: -30.21
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