SPT - Sprout Social: Time For A Reset (Rating Upgrade)

2024-05-05 05:34:40 ET

Summary

• Sprout Social's stock dropped over 40% after reporting Q1 results and reducing its current-year guidance.
• The company faces risks such as companies cutting back on sales and marketing spend and lack of execution chops in enterprise sales.
• However, there are positives, including a large TAM with secular tailwinds and high-margin recurring revenue.
• Now trading at <4x forward revenue, Sprout Social can be considered a bargain, though execution risks are on the horizon.

As earnings season continues in full swing, volatility is at a year-to-date high as stocks react sharply to earnings news. Unfortunately, while many large caps have succeeded at winning back investors' trust this quarter, many small caps have faltered dramatically....

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