2023-08-10 10:31:19 ET
TaskUs ( NASDAQ: TASK ) fell ~18% Thursday morning post market open after RBC Capital downgraded the digital outsourcing services provider on "negative macro backdrop".
The agency lowered the recommendation on the company to Sector Perform from Outperform, and reduced the price target to $16.00 from $21.00.
The move comes as the company's management lowered its FY23 revenue guidance by $33M or 3.5%, and adjusted EBITDA guidance by $12M, or 5.5%.
The company expects FY23 revenue of $900M to $910M, vs. consensus of $932.09M.
Adjusted EBITDA margin is expected to be ~23%.
"The continued volatility in the macro environment has impacted client volumes and we have updated our full year outlook to reflect this," CEO Bryce Maddock said.
"Given the lower revenue outlook and the investments that we're making to drive growth, we've returned our adjusted EBITDA guidance to 23% for the full year in line with our initial guidance," Maddock said during the company's Q2 earnings call.
Q3 guidance, furthermore, is below prior expectations, RBC Capital said.
The agency said it would consider becoming more constructive once revenue stabilizes.
The rating by RBC Capital contradicts the average sell-side analyst rating of Buy, with an average price target of $15.57. The stock is currently trading at $9.90.
Seeking Alpha analysts give the stock a Hold rating and the Quant Rating system gives the stock a Sell rating.
TASK has negative EPS revisions and declining growth when compared to other IT stocks. The company has ROE Growth ( FWD ) of -29.38%, while the sector median is -0.64%, according to a recent SA report.
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TaskUs falls after RBC Capital downgrades on negative macro backdrop