Zendesk ( NYSE: ZEN ) ended its long-running saga as a public company last month after it agreed to be acquired by buyout firm Hellman & Friedman and Permira. And with a competing bid deemed unlikely, investment firms are downgrading the customer service software company.
Stifel analyst J. Parker Lane lowered his rating to hold and cut the price target to $77.50, the offer price that Hellman & Friedman and Permira paid. Lane noted that after reviewing the background and financial projections, it's clear that Zendesk ( ZEN ) ran a "thorough" sale process and the company saw "significant" issues in April and May with bookings and revenue forecasts for 2023 and 2024 were likely to be "well below" current estimates.
"Assuming that uncertainty around fundamentals will continue in the near-future, we believe the likelihood of a competitive bid or shareholders rejecting the deal is greatly reduced," Lane wrote in a note to clients.
Zendesk ( ZEN ) shares were fractionally lower in premarket trading at $75.01, a slight discount to the $77.50-per-share offer price.
William Blair analyst Arjun Bhatia agreed with Lane, noting that the company's "deteriorating fundamentals" make it unlikely another bidder emerges, citing the company's preliminary proxy statement filed yesterday.
"Though we had previously believed that there was some likelihood of a higher bid from another party, the slowdown in the business is greater than we expected, and we now see a significantly lower probability of another offer," Bhatia wrote.
Last week, Zendesk ( ZEN ) and its acquirers Permira and Hellman & Friedman filed with Chinese antitrust regulators for a "simplified procedure" for the pending $10.5B sale .
Analysts are mixed on Zendesk ( ZEN ). It had an average rating of BUY from Seeking Alpha authors , while Wall Street analysts rate it a HOLD . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates ZEN a HOLD .
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Zendesk unlikely to see competing bid analysts say, as downgrades come in