Cornerstone Pops 16% After-Hours As Quarterly Earnings Blow Past Analysts’ Estimates

Cornerstone OnDemand shares jumped 16.1% in after-hours trading on Feb. 16 after its 4Q earnings paced past analysts’ estimates.

The software development company reported 4Q non-GAAP diluted earnings per share (EPS) of $0.64, beating the Street consensus of $0.27. Revenues in the fourth quarter came in at $206.9 million, up by 38.3% and ahead of the consensus estimates of $196.1 million.

Cornerstone OnDemand’s (CSOD) CEO, Phil Saunders said, “After a year in which we completed a major acquisition, navigated a pandemic, transitioned leadership, and initiated significant internal transformation, we believe our fourth quarter performance is indicative of the strength of this company’s opportunity, and we are confident that the steps taken over the past year will position us for sustained long-term success.”

In the first quarter of FY21, the company expects revenues to generate between $203 million to $205 million. Subscription revenues are projected to land between $198 million and $200 million and non-GAAP operating income is forecasted in a range of $44 million to $46 million. For FY21, the company foresees revenues of between $847 million to $857 million. (See Cornerstone OnDemand stock analysis on TipRanks)

Last month, Barclays analyst Raimo Lenschow raised the price target from $48 to $51 and reiterated a Buy rating on the stock, saying that he expects “two distinct phases” for software investments this year.

Lenschow believes that in the first few months of this year, there will be a continuation of the investment trends from last year focusing on structural, high-growth names.

The analyst argues that with rising COVID-19 vaccinations, a broader economic recovery could take place which could help all vendors in the software space including CSOD.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 2 analysts recommending a Buy. The average analyst price target of $50.50 implies 9.2% upside potential to current levels.

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