Shares of Digital Turbine (NASDAQ: APPS) plunged by more than 15% in pre-market trading on Thursday after Oppenheimer top-rated analyst Timothy Horan downgraded the stock to a Hold from a Buy. The analyst noted that it appeared that the mobile growth platform’s acquisitions of AdColony and Fyber and its “Davinci Code” plan were not working out.
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The analyst commented, “Although the company blamed macro and emphasized that the ‘foundation has not changed,’ our conclusion … is that the business model is still a work in process with unclear long-term growth and profitability.”
The reasoning behind Horan’s view was bolstered by APPS’ disappointing fiscal Q3 results and guidance. The company reported revenues of $162.3 million, a jump of 56.8% year-over-year and missing estimates by $23.2 million.
Adjusted earnings came in at $0.29 per share but fell short of consensus expectations of $0.33.
Even the FY23 guidance proved to be weak with revenues expected to be in the range of $660 million to $670 million falling short of the consensus estimate of $728.43 million. Adjusted earnings are anticipated to be between $1.15 and $1.20 per share versus expectations of $1.41.
Analysts are cautiously optimistic about APPS stock with a Moderate Buy consensus rating based on two Buys and two Holds.
