Craig-Hallum downgrades Cerence to Hold, lowers price target to $22

As previously reported, Craig-Hallum downgraded Cerence to Hold from Buy with a price target of $22, down from $25. Results for the December 2023 quarter appear in-line to modestly ahead, after backing out several large “unusuals,” the firm notes. Craig-Hallum also highlights that guidance for the March 2024 quarter was about $9M below the street estimate of $70.9M on “timing and seasonality” issues. Finally, the annual guide was reiterated. Weighing the pros and cons from here has the firm taking a more cautious view on the shares. Specifically, getting to the guided range for the year requires very aggressive revenue acceleration of variable license revenue, it adds.