8x8's Focus On Margin Improvement Impresses Analysts

Needham analyst Ryan Koontz reiterated 8x8 Inc EGHT with a Buy and lowered the price target from $8 to $6.
EGHT's 2Q23 revenue was in line with consensus, while EPS beat expectations on improving and better than expected margins.
2H23 revenue guidance was broadly in line (excluding FX), while the operating margin continues to improve.
SMB ARR returned to MSD% growth, while Enterprise was ~flat impacted by FX. The proliferation of Teams in the Enterprise has put a lid on UCaaS.
Recently restructured debt and improving cash flow removes potential near-term risk and likely boost the stock. At the same time, the company accelerated its pivot into the contact center market, where 75% of its R&D spend is focused.
He increased his FY23 and FY24 EPS estimates.
Mizuho analyst Siti Panigrahi maintained 8x8 with a Neutral and cut the price target from $6 to $5.
While 8x8 reported an in-line September quarter for total revenue, management lowered full-year FY23 revenue guidance due to FX headwinds and the worsening macro backdrop that continue to weigh on top-line growth.
While he cut his revenue growth, he was encouraged by the continued focus on improving margins and expected the company to achieve a 10% operating margin in the back half of FY24.
He cut both his forecasts and price target.
Wells Fargo analyst reaffirmed 8x8 with an Underweight and reduced the price target from $5 to $4.
Price Action: EGHT shares traded higher by 18.18% at $4.03 on the last check Friday.

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