IBEX Downgraded After Dismal 4Q Results, Analyst Expects Macro Woes To Persist

RBC Capital Markets analyst Daniel R. Perlin lowered IBEX Limited IBEX to Sector Perform from Outperform, lowering the price target to $18 from $27.

IBEX recorded a dismal Q4, where earnings missed estimates in the face of a challenging macro-environment.

Given the ongoing industry pressures, the analyst downgraded the stock and would consider becoming more constructive should revenue growth reaccelerate.

Adj. EBITDA in Q4 was $6.5 million below the analyst's estimate, of which $5.3 million is owing to the company's shift to U.S. GAAP, Perlin adds. 

Incorporating the quarter's results and guidance, the analyst adjusted FY24 rev/adj. EBITDA estimates to $528 million/$68 million, lower than previous estimates of $582 million/$101 million. 

For FY24, the company expects capex of $15 million–$20 million, and the shift to U.S. GAAP to have no significant impact on the company's historical free cash flow conversion, notes the analyst. 

Perlin initiated FY25 rev/adjusted EBITDA estimates of $546 million/$77 million.

The analyst's FY24 and FY25 adjusted EPS estimates are $1.89 (previously $2.41) and $2.11, respectively. 

On the positive side, management noted that IBEX signed an additional 6 new logos since the end of June, compared to 10 in all of FY23, resulting in $35 million of revenue from new logos, as demand seems to be showing signs of improvement and the company's win rates remain in line with historical levels, the analyst adds.

Price Action: IBEX shares are trading lower by 25.10% to $13.60 on the last check Thursday.