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.
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.
