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HasiCorp (NASDAQ:HCP) shares plunged more than 18% in early trading after the software company reported third-quarter results and issued guidance that showed a slowdown in several areas, prompting Wall Street firms to express deep concern.
TD Cowen analyst Derrick Wood downgraded HashiCorp (HCP) to market perform and cut its price target to $23, noting the current remaining performance obligations and billings estimates missed the firm's estimates, with concerns that there will be a "sharp" deceleration in the second-half of the year.
"We think growth visibility will remain highly constrained for at least a few [quarters]," Wood wrote in an investor note. Wood also lowered his growth estimate for fiscal 2025.
Wood also noted HashiCorp (HCP) is facing several ongoing challenges, including no improvement in buyer behavior, the trend of smaller sized deals and a shift in the go-to-market strategy amid new leadership.
Stifel analyst Brad Reback said the "lackluster" cloud results and guidance is likely to weigh on the stock, as he cut the price target to $26.
"While macro-headwinds persist, we believe management is appropriately focused on monetization, encouraging cloud migration and profitability as they await the macro tides to turn, but with uncertainty around FY25 revenue growth rate the stock is likely range-bound," Reback wrote in an investor note.
JMP analyst Patrick Walravens kept the firm's market outperform rating and $38 price target, but acknowledged the slowing growth, while also anticipating a rebound in 2024.
"[O]ur view is that HashiCorp is experiencing the pressure of cost optimization with a lag because it has an entitlement model rather than a consumption model, but just as Datadog (DDOG), MongoDB (MDB) and Snowflake (SNOW) saw their optimization trends improve, the same should happen for HashiCorp next year, in our view."
Analysts are largely bullish on HashiCorp (HCP). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates HCP a HOLD.