HCP - HashiCorp cut to Neutral at BofA on 'disappointing' outlook; stock slumps ~25%
2023-06-08 14:30:04 ET
HashiCorp ( NASDAQ: HCP ) stock fell ~27% on Thursday after Q1 results and a downgrade by BofA on "disappointing FY24 outlook."
The firm cut HashiCorp's shares rating to Neutral from Buy and reduced the price target to $30 from $36.
BofA analysts said the company reported mixed Q1 results and lowered guidance for fiscal 2024.
For FY24, HashiCorp reduced its revenue outlook to be between $564M and $570M, from prior guidance of $591M to $595M provided during Q4 fiscal 2023 results in March; ( consensus $575.32M).
The analysts said that at mid point, $567M, the outlook was well below their expectations of $593M.
The firm noted that the lower outlook is largely macro, but execution is in question. The cause for the reduced outlook was deals pushing toward the end of the quarter, and a large retail customer pulling back on Vault entitlements from heightened December levels.
The business seems to be experiencing a lag effect from cloud optimization headwinds. Optimization had previously served as a tailwind, given that Terraform assists with cloud provisioning and workload optimization. This raises some concern on the Terraform value proposition, the analysts added.
However, the firm is comfortable with macro as largely the cause for the disappointing outlook and it is likely to be proven temporary.
In addition, HashiCorp also announced the appointment of Susan Ledger as president, Worldwide Field Operations.
The firm noted that it is not clear how St. Ledger will divide responsibilities with CRO Brandon Sweeney, introducing some execution risk, in addition to the heightened macro risk.
In its Q1 results , HashiCorp also said it was reducing its workforce by ~8% to lower costs.
“We are responding to the current customer and economic environment with proactive actions to lower our ongoing costs," said HashiCorp's CEO Dave McJannet.
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HashiCorp cut to Neutral at BofA on 'disappointing' outlook; stock slumps ~25%