Pivotal Software (PVTL, $10.81 ) issues weaker-than-expected guidance; analysts slash price targets

On Wednesday, Pivotal Software’s latest quarterly results turned several analysts’ cautious on the stock.

Generating an adjusted loss of -3 cents a share for the fiscal first quarter, the cloud-oriented software company  fared better compared to analysts’ estimates of -5 cents a share. It is also an improvement  over the -10 cents a share loss of the year-ago quarter. 

Pivotal’s first quarter revenue of $185.7 million also beat analysts’ expectation of $184.1 million.

However, the company lowered its full-year revenue outlook to a range of $756 million to $767 million, well below analysts’ consensus estimate of $803 million (based on Refinitiv poll).

For the fiscal second quarter in particular, Pivotal expects revenue to range between $185 million to $189 million, lagging the average analyst estimate of $198 million, (based on Refinitiv poll).

Following the report, analysts Daniel Ives and Strecker Backe of Wedbush Securities called Pivotal’s first quarter results a “train wreck” , due to weak billings numbers and lower-than-expected guidance. They lowered their rating on the stock to “neutral” from “outperform”, and slashed their price target to $15 from $26 per share.  

Analysts at Needham, on the other hand, maintained their “buy” rating on Pivotal. But they lowered their price target to $21 from $28 per share.

Alex Kurtz and Steven Enders of KeyBanc Capital Markets re-iterated their “overweight” rating on Pivotal, while reducing their price target to $21 from $27.

On Wednesday, Pivotal shares declined more than -40%.

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.