Bill.com ( NYSE: BILL ) stock dropped 29.3% to a near nine-month low on Friday as the payment software firm's Q2 earnings indicated slowing total payment volume growth.
The results led to two analyst downgrades, and multiple revisions in price targets.
BMO Capital downgraded Bill.com ( BILL ) to Market Perform from Outperform, given greater-than-expected deceleration in its core business as SMBs slowed spending.
"While guidance bakes in incremental deceleration for the next few quarters, especially for total payment volume, we are concerned about the trajectory into next year where consensus estimates now look high," said analyst Daniel Jester. He also pointed to medium-term concerns about the competitive environment.
BMO cuts its PT on Bill.com ( BILL ) to $128 from $158 (0.7% potential downside to last close).
BTIG downgraded Bill.com ( BILL ) to Neutral from Buy as topline results pressure current valuation levels despite improving profitability.
"The forward outlook was well below expectations, even before considering the magnitude of the Q2 upside," said analyst Matt VanVliet. "Growth slowing to a more sustainable level was inevitable, but the suddenness is more of the issue. The prospect of TPV flat Y/Y in Q3 is a clear indication of the broad-based SMB macro impact."
Evercore ISI noted that management's commentary indicate that "businesses of all sizes are taking a hard look at their spending", but remain bullish on its long-term opportunity within payments.
Brokerages that slashed their PTs include: Sumitomo $110 (prior $140, 14.7% potential downside), Morgan Stanley $185 (prior $200, 43.5% potential upside), Mizuho $100 (prior $105, 22.4% potential downside), Wells Fargo $138 (prior $180, 7.1% potential upside).
While sell-side ratings on Bill.com ( BILL ) are largely bullish , SA Quant rates the stock Hold .
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Bill.com stock drops 29% on slowing TPV growth; BMO, BTIG move to sidelines