Craig-Hallum analyst Jeff Van Rhee lowered the firm’s price target on Cerence to $25 from $38 and keeps a Buy rating on the shares. The firm notes Cerence put up a strong quarter and a “very messy” outlook. Craig-Hallum believes the guide for FY24 embeds 10% “organic” revenue growth for 2024, and the FY25 target embeds about 6% organic top line. The firm thinks the valuation embedded an even worse outcome on the quarter. That said, Craig-Hallum is concerned at the relative lack of traction in connected versus all prior commentary/guidance, as OEMs seem to be slow rolling their deployments of Cerence connected technology and backlog growth for connected is less than overall backlog growth.
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