Why Is Cornerstone OnDemand Stock Trading Higher Today?

  • Needham analyst Scott Berg downgraded Cornerstone OnDemand Inc CSOD to Hold from Buy after the company agreed to be acquired by Clearlake Capital. 
  • The acquisition price may not be adequate at 6x revenues and 20x free cash flows. However, the thorough sale process negates the possibilities of a superior bid, Berg added.
  • Cornerstone agreed to be acquired by Clearlake for $57.50 per share in cash, signifying an enterprise valuation of $5.2 billion.
  • The purchase price implies a 31% premium to Jun. 1 closing price, the last full trading day before Clearlake filing a Schedule 13D regarding Cornerstone's strategic review process.
  • The talent management firm reported Q2 revenue of $214.3 million, beating the analyst consensus of $209.5 million. Subscription revenue growth of 16.7% drove a 16.3% revenue growth year-on-year.
  • EPS of $0.73 beat the analyst consensus of $0.52.
  • Price action: CSOD shares traded higher by 13.2% at $56.51 on the last check Friday.
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