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Smartsheet Stock Fell 18% Due to Weak Q2 Outlook

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Today at 6:08 AM ET, Smartsheet stock fell 18% to $48.50 in the pre-market session. The stock fell after the company reported its results for the first quarter of fiscal 2021 (quarter ended April 30) on Wednesday. The company missed the first-quarter billings expectations and provided a lower-than-expected outlook for the second quarter. However, Smartsheet’s revenues and earnings numbers for the first quarter beat Wall Street’s consensus estimate.

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Smartsheet’s earnings results for Q1 2021

In the first quarter, Smartsheet reported an adjusted EPS of -$0.11 compared to -$0.12 in the first quarter of fiscal 2020. The adjusted EPS beat analysts’ consensus estimate of -$0.19. Smartsheet generated sales of $85.5 million—a growth of 52.1% from the first quarter of fiscal 2020. The company beat analysts’ consensus revenue estimate of $81.3 million. In the first quarter, subscription sales rose 53.3% YoY (year-over-year) to $77.2 million and accounted for 90.3% of the total revenues. Calculated billings rose 30% YoY to $89.9 million in the first quarter, which missed analysts’ estimate of $94.1 million.

In the first-quarter earnings release, Smartsheet CEO Mark Mader said, “We delivered a good first quarter, given the market conditions.” He also said, “Smartsheet has become an increasingly mission-critical platform for enterprises seeking to enable a dynamic workforce; a workforce capable of working from anywhere, adapting to rapidly changing conditions, and staying deeply connected to their individual work and the mission of their teams, no matter the circumstance.”

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Financial outlook

In the second quarter, Smartsheet expects its total revenue to be between $86 million and $87 million. The company expects its calculated billings to be between $91 million and $93 million. Meanwhile, Smartsheet expects its non-GAAP EPS to be between -$0.18 and -$0.16 for the second quarter.

For fiscal 2021, Smartsheet expects its total revenue to be between $360 million and $370 million. The company also expects its non-GAAP EPS to be between -$0.54 and -$0.45 for fiscal 2021.

Wall Street analysts expected Smartsheet to report an adjusted EPS of -$0.14 on revenue of $88.2 million in the second quarter. Analysts also expect the company’s sales to rise 35.8% YoY in fiscal 2021 to $367.8 million. The sales could rise by 30.8% YoY in fiscal 2022 to $481.0 million. The adjusted net loss per share will increase from $0.49 in fiscal 2020 to $0.56 in fiscal 2021. Analysts also expect an adjusted net loss per share of $0.44 in fiscal 2022.

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Analysts’ recommendations for Smartsheet

Among the 15 analysts following Smartsheet stock, ten recommend a “buy” and five recommend a “hold.” None of the analysts recommend a “sell.” Wall Street analysts’ mean target price on the stock is $50.58, which implies a 14.4% loss from the current level of $59.08. The consensus target price for the stock has increased from $48.50 in May—a growth of 4.3%.

Many analysts revised their target price for Smartsheet stock after its first-quarter results.

  • Jefferies decreased its target price from $55 to $50.
  • Citigroup decreased its target price from $58 to $51.
  • Canaccord Genuity increased its target price from $45 to $55.
  • Needham increased its target price from $60 to $67.
  • BMO increased its target price from $48 to $51.
  • Wedbush increased its target price from $40 to $45.
  • D.A. Davidson increased its target price from $37 to $45.

Stock returns

Smartsheet stock rose 1.3% on Wednesday and ended the day at $59.08. At this closing price, the company’s market cap is $7.1 billion. Notably, the stock is trading 2.3% below its 52-week high of $60.45 and 91.1% above its 52-week low of $30.91.

Based on the closing price on Wednesday, Smartsheet stock was trading 6.4% above its 20-day moving average of $55.53. The stock is also trading 16.4% above its 50-day moving average of $50.75 and 22.7% above its 100-day moving average of $48.16. Smartsheet’s 14-day relative strength index number is 64 which indicates that it’s approaching the overbought zone.

Smartsheet stock has a middle Bollinger Band level of $55.53, while its lower Bollinger Band level is $51.26. On Wednesday, Smartsheet stock closed near its upper Bollinger Band level of $59.81, which suggests that it’s overbought.

On Wednesday, the Dow Jones Industrial Average (NYSEARCA:DIA) rose by 527 points or 2.05%. Also, the S&P 500 (NYSEARCA:SPY) and the Nasdaq Composite rose 1.36% and 0.78%, respectively. Read CFOs Expect a Dow Jones Crash: Is Double-Dip Next? to learn more.

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