Raimo Lenschow, an analyst from Barclays, maintained the Buy rating on Skillsoft (SKIL – Research Report). The associated price target was lowered to $20.00.
Raimo Lenschow has given his Buy rating due to a combination of factors, despite acknowledging the challenges faced by Skillsoft. The recent underperformance in Skillsoft’s Q4 results and the conservative guidance for FY25 have set a low bar for investor expectations. The company’s shares had already seen a significant decline, and the latest financial report, which showed bookings and revenue below expectations, could have further dampened sentiment. However, Lenschow identifies the potential for a turnaround, noting that the poor performance was largely attributable to broader market conditions rather than company-specific missteps. He suggests that while the macroeconomic headwinds facing Skillsoft’s Instructor-Led Training and the lower end of its customer base are concerning, they are not unique to the company and are indicative of wider industry trends.
Moreover, Lenschow finds reasons for optimism in Skillsoft’s valuation, which he considers relatively inexpensive at the current share price, indicating a potential upside as market conditions improve. Despite the short-term overhang from the CEO transition and the need for more consistent performance, he sees the maintained net dollar retention rate and the strength in Skillsoft’s large customer cohort as positive indicators. These customers, who constitute a significant portion of the company’s Annual Recurring Revenue, are reported to be growing faster than the overall segment, suggesting that Skillsoft has a solid foundation on which to build its recovery. The alignment of EBITDA with consensus, despite top-line misses, further supports the view that Skillsoft is managing its margins effectively during a challenging period.
Lenschow covers the Technology sector, focusing on stocks such as Microsoft, Teradata, and Paycom. According to TipRanks, Lenschow has an average return of 3.6% and a 50.10% success rate on recommended stocks.
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Skillsoft (SKIL) Company Description:
Churchill Capital Corp II is a blank check company.
