Amdocs shares plunged Wednesday as a dispute with T-Mobile threatened its business with the telecom giant and weighed on its revenue outlook.
The stock sank 27% to $45.50 on Wednesday and was on pace to log its largest percentage decline in 24 years, since June 21, 2002, when shares fell 41%, according to Dow Jones Market Data.
The selloff came after CEO Shimie Hortig said Tuesday the software and services provider for telecommunications companies faces major business headwinds in fiscal 2027, ending Sept. 30, 2027, due to T-Mobile.
Both Amdocs and T-Mobile have issued notices to one another, asserting that the other company has materially breached agreements under which Amdocs provides software and services to T-Mobile.
Amdocs said Tuesday it is prepared to pursue its claims and that its fiscal 2027 guidance allows for the potential termination of its business agreements with T-Mobile.
Amdocs late Tuesday said it expects fiscal first-quarter revenue of $955 million to $995 million, well below the consensus expectation of $1.2 billion. For fiscal 2027, the company forecast a revenue decline of 14% to 18%. The forecast also reflects business sales and exits from certain hardware resale activities.
"Looking into fiscal 2027, our guidance reflects major headwinds from T-Mobile due to a recent dispute, the completion of the integration project of the USCellular customers and reduction in T-Mobile's discretionary spending," Hortig said in the earnings release.
Amdocs, however, expects a return to growth in fiscal 2028, forecasting mid-single-digit revenue growth and high-single-digit earnings growth.
Oppenheimer downgraded Amdocs stock to Perform from Outperform on Wednesday. The firm doesn't have a price target on the stock and noted that the "extremely weak" fiscal 2027 guidance was a major concern even as the company remains positioned to leverage artificial intelligence to drive cost and operational improvements for telecommunications companies.
The selloff deepened the stock's decline this year to 44%, putting it on pace for its worst yearly performance since 2008.
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