Synchronoss Technologies, Inc. (SNCR) is Attracting Investor Attention: Here is What You Should Know

Synchronoss Technologies (SNCR) is underperforming, with shares down 4.9% over the past month against the S&P 500's 1.7% gain, and is currently rated a Zacks Rank #5 (Strong Sell). Current quarter earnings are projected to be $0.25 per share, a 47.9% year-over-year decrease, and the current fiscal year estimate of $1.17 represents a 28.2% decrease from the prior year, although the next fiscal year is expected to see a 47% increase; revenue is also projected to decline slightly this year before growing 4% next year. Despite these challenges, Synchronoss receives an 'A' grade for value, suggesting it may be undervalued compared to its peers.

Analysis

Synchronoss Technologies (SNCR) has recently garnered investor attention despite significant underperformance, with its shares declining 4.9% over the past month, contrasting with the S&P 500 composite's 1.7% gain and its own Zacks Internet - Software industry's 3.6% rise. Fundamental concerns are highlighted by substantial downward revisions in earnings estimates. For the current quarter, earnings are projected at $0.25 per share, a steep 47.9% year-over-year decrease, with the Zacks Consensus Estimate having been revised downwards by 52.4% over the last 30 days. Similarly, the current fiscal year consensus earnings estimate of $1.17 signifies a 28.2% decline from the prior year, with this estimate also revised down by 23.9% recently. While a recovery is anticipated for the next fiscal year, with a consensus EPS of $1.72 indicating a 47% year-over-year increase (though this estimate has remained unchanged over the past month), near-term revenue prospects are also subdued. Current quarter sales are estimated at $42.59 million, a 2% year-over-year decrease, and current fiscal year revenue is expected to decline by 0.7% to $172.42 million before a projected 4% growth to $179.25 million in the next fiscal year. The company's last reported quarter saw revenues of $42.21 million (-1.8% YoY), slightly beating estimates by 0.25%, but EPS was a significant miss at -$0.30, a -203.45% surprise compared to $0.44 a year ago. Reflecting these challenges, Synchronoss holds a Zacks Rank #5 (Strong Sell). Despite these negative indicators, the company scores an 'A' on the Zacks Value Style Score, suggesting it may be trading at a discount relative to its peers.

Key Decisions for Investors

• Investors should exercise caution given the Zacks Rank #5 (Strong Sell) and the significant recent downward revisions to current quarter and current fiscal year earnings estimates for SNCR.
• Monitor for stabilization and positive revisions in earnings estimates and a return to consistent revenue growth before considering new or increased positions, despite the potential for a 47% EPS increase next fiscal year.
• While the 'A' grade for Value suggests potential undervaluation, this should be weighed carefully against the prevailing negative earnings momentum and recent stock underperformance.