Verint Systems Is 'Laser Focused'

• Shares of Verint Systems, Inc. VRNT have declined more than 20 percent over the last three months.
• FBR’s Daniel H. Ives has maintained an Outperform rating on Verint Systems, while lowering the price target from $68 to $63.
• The company reported robust 2Q16 results, while lowering its guidance for 2H16, driven by Fx headwinds and concerns regarding a “choppy” spending environment.

According to the FBR report, “Verint remains in the midst of this transition story and is laser-focused on building out its next-generation cybersecurity product portfolio, while expanding its product tentacles on the work force optimization front.”

The company reported its F2Q16 results ahead of the Street consensus, with total revenue, which was up 8 percent year on year, and EPS well ahead of the consensus.

Although investors are likely to be relieved with the robust results, Ives believes “all eyes will likely be focused on the company's modestly lowered outlook for 2H16 due to currency headwinds and some caution around a choppy spending environment in the field.”

However, Ives also mentioned that the lowered guidance was more “conservatism” than being a demand issue but was still likely to put some pressure on the stock while investors “digest” the lowered outlook.

In fact, Ives mentioned that Verint Systems was a consistent 8-10 percent topline growth story, “with expanding margins that is in the early stages of bearing fruit.”

The F2Q16 revenue and pro forma EPS estimates have been lowered to reflect the Fx headwinds. The FY16 and FY17 revenue and pro forma EPS estiamtes have also been lowered.