Shares of Everbridge Inc. appeared to fall off a cliff Friday, putting them on track for their biggest-ever one-day selloff by a wide margin, as the chief executive’s resignation and disappointing revenue outlook led a number of analysts to abandon their bullish calls.
The stock
EVBG,
-45.39%
plummeted 46.3% on heavy volume in afternoon trading, putting them on track for the lowest close since September 2019, and enough to make it the biggest loser on major U.S. exchanges. Trading volume ballooned to 11.8 million shares, compared with the full-day average over the past 30 days of about 572,000 shares.
The percentage decline is more than three times the previous one-day record drop of 14.3% suffered on Oct. 28, 2020. The price decline of $53.37, which compares with the previous record price fall of $20.26 on Nov. 10, 2021, shaved about $2.06 billion off the company’s market capitalization.
The company said late Thursday that Chief Executive David Meredith notified the board of directors of his intention to resign as CEO, after 2 1/2 years in the role, and from the board of directors. The company did not provide a reason for Meredith’s resignation.
The board said it accepted Meredith’s resignation, and will immediately establish an office of the CEO, and begin to transition leadership to Chief Financial Officer Patrick Brickley and Chief Revenue Officer Vernon Irvin.
Separately, the company reiterated its 2021 revenue guidance of $367.6 million to $367.8 million, but said it expects revenue growth of 20% to 23% in 2022. The current FactSet revenue consensus for 2022 of $456.5 million, which has already been lowered from $464.2 million at the end of November, implies 24.1% to 24.2% growth from 2021 guidance.
No less than four analysts surveyed by FactSet downgraded Everbridge in the wake of the announcements.
JPMorgan analyst Sterling Auty cut his rating on the stock to neutral roughly 10 months after upgrading it to overweight, and slashed his price target to $127 from $200.
He said there were already questions about slowing growth, despite the opportunity for countrywide public notification system wins in the European Union ahead of the upcoming deadline for implementation.
“The new 2022 growth guidance is likely to further solidify those concerns, especially with the possibility of disruption from the leadership change,” Auty wrote in a note to clients.
Stifel Nicolaus’s J. Parker Lane lowered his rating to hold, after being at buy for at least the past three years, saying he believes there are “more questions than answers” at this point. He dropped his stock price target to $100 from $185.
“In our view, the timing and uncertainty around the circumstances of Mr. Meredith’s departure combined with the company’s guidance introduces a high degree of uncertainty into the story in the near term, and we are moving to the sidelines while we digest the disruption Mr. Meredith’s departure will have on the company’s operations and assess the potential changes made to the business under its new co-CEO’s and future leadership,” Lane wrote.
Meanwhile, Raymond James analyst Brian Peterson reiterated the outperform rating he’s had on the stock for at least three years, while keeping his price target at $180.
“While we’re never encouraged by a CEO transition, we believe [Everbridge] may be in a unique situation to have a smooth transition in this regard, with Mr. Brickley and Mr. Irvin also having the help of Chairman (and former CEO) James Ellertson,” Peterson wrote.
The stock has now plummeted 53.3% year to date, while the SPDR S&P Software & Services exchange-traded fund has gained 6.4% and the S&P 500 index
SPX,
+0.95%
has rallied 25.1%.
