Market Overview

Stifel Downgrades Synchronoss Technologies: 'Time Is Not On Their Side'

Stifel Downgrades Synchronoss Technologies: 'Time Is Not On Their Side'
Related SNCR
10 Biggest Price Target Changes For Monday
48 Biggest Movers From Yesterday
Stifel upgrades Synchronoss (Seeking Alpha)

Synchronoss Technologies, Inc. (OTC: SNCR) — a provider of cloud, messaging, digital and IoT products and platforms — has seen its story "descend into madness" over the past 18 months, according to Stifel, and the firm is turning bearish on the stock. 

The Analyst

Stifel's Tom Roderick downgraded Synchronoss Technologies from Hold to Sell with a price target lowered from $8 to $3.

The Thesis

Over the past year-and-a-half, Synchronoss Technologies' story has been dominated by concerns related to the high level of revenue concentration from top carriers and competitive concerns, Roderick said in the downgrade note. (See the analyst's track record here.) 

Up until this point, a bearish stance couldn't be justified, as the company had multiple levers to pull, including one-time transactions, accounting changes and M&A deals, the analyst said. 

"SNCR is out of levers, and time is not on their side," he said. 

Recent updates now imply the "picture looks tough from our perch," Roderick said. They include: 

  • Verizon Communications Inc. (NYSE: VZ)'s decision in late 2017 to cease offering free storage tiers for clients. 
  • The messaging business performed well in the first quarter, but it is now apparent it benefited from a one-time and non-repeating license to an APAC customer,
  • By the end of 2019, most of the company's revenue benefits, such as ASC 606, will be gone.
  • The spin of the lower-margin, lower-growth activation business seemed logical when announced, but the arrangement that facilitated the shift is questionable.
  • Liquidity issues are likely to intensify, as the company has an outstanding $230 million convertible debt instrument due in August 2019.

Price Action

Synchronoss Technologies shares were trading lower by 25 percent at the time of publication Monday at $4.05. 

Related Links:

Mid-Morning Market Update: Markets Down; Caterpillar Tops Q2 Expectations

7 Stocks To Watch For July 30, 2018

Latest Ratings for SNCR

Dec 2018Stifel NicolausUpgradesSellHold
Jul 2018Stifel NicolausDowngradesHoldSell
May 2017Credit SuisseDowngradesNeutralUnderperform

View More Analyst Ratings for SNCR
View the Latest Analyst Ratings

Posted-In: cloud cloud storage IoT StifelAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (SNCR + VZ)

View Comments and Join the Discussion!

Latest Ratings

CMAB. Riley FBRDowngrades84.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

BofA Upgrades Ally Amid Favorable Lending Backdrop

Mid-Afternoon Market Update: Crude Oil Up Over 2%; RLJ Entertainment Shares Spike Higher