2023-05-09 09:31:05 ET
TaskUs ( NASDAQ: TASK ) slid 7.4% on Tuesday after the outsourcing company issued disappointing guidance amid increased macroeconomic uncertainty, prompting Bank of America to downgrade the stock to Underperform from Buy.
"We believe TASK is losing visibility, while structural changes in client behavior could have implications for longer-term potential revenue growth," said analyst Cassie Chan. "Ongoing concerns around ChatGPT/generative AI displacing IT/BPO outsourcing businesses will also be a sentiment overhang."
TaskUs ( TASK ) cut its 2023 revenue guidance by ~3% (to -2.4% Y/Y). "Midpoint of the guide assumes acceleration in H2 to Y/Y growth in Q4, which is difficult considering historically 'high-growth' digital native companies (TASK's sweet spot) are facing lower volumes and incremental pressure to cut costs," said Chan.
Other headwinds include lengthening sales cycles and lower volumes from large U.S. clients.
BofA revised its 2023/2024/2025 EPS estimates for TASK to $1.28/$1.42/$1.55 from $1.30/$1.53/$1.79. Revenue estimates for 2023/2024/2025 were cut to $929.6M/$1.01B/$1.12B from $960.5M/$1.09B/$1.26B.
Price target was slashed to $11 from $25, implying 10.1% potential downside to its last close.
Wall Street analysts are largely bullish on TASK , but SA Quant flagged that the stock is at high risk of performing badly.
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TaskUs slides 7% as macro uncertainty clouds outlook, BofA downgrades stock