Accolade Stock Sinks After Guidance Disappoints. The Case to Buy the Dip. -- Barrons.com

By Angela Palumbo

Accolade stock is falling sharply after its earnings report disappointed. That could present a good buying opportunity, according to one Guggenheim analyst.

Analyst Jack Wallace lowered his price target on the tech and health company to $6 from $13, while maintaining a Buy rating on the stock. He wrote in a research note Friday that "we think investors should buy the dip as the stock now trades below 1x revenue and 19x EBITDA [earnings before interest, taxes, depreciation and amortization]."

Wallace added the optimism is fueled by his belief that the stock's valuation is at a bottom, and management's lowering of its fiscal-year guidance is a "clearing of the decks move that should allow ACCD to at least meet, if not exceed, guidance for the rest of the year."

After the stock market closed on Thursday, Accolade said it expects revenue for the fiscal year ending Feb. 28 to be between $460 million and $475 million. That's below prior guidance of $480 million to $500 million and below Wall Street estimates of $490.2 million, according to FactSet.

"We are de-risking our full year revenue forecast and focusing our investments on margin expansion and revenue opportunities that support our profitability objectives," Chief Financial Officer Steve Barnes said in the earnings release.

Accolade also reported a fiscal first-quarter loss of 35 cents a share on revenue of $110.5 million. Analysts surveyed by FactSet were expecting a loss of 48 cents a share on revenue of $106 million.

"Overall, while some investors will be disappointed by the modestly lower sales outlook, we applaud management's focus on driving margins and cash flow and believe this will support longer-term shareholder value creation (despite likely near-term pressure on the stock)," William Blair analyst Ryan Daniels wrote in a note. He rates the stock as Outperform without a price target.

Shares of Accolade were tumbling 26% in premarket trading Friday to $4.70. Coming into the session, the stock has fallen 47% this year.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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June 28, 2024 08:04 ET (12:04 GMT)

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