Continue Reading Below
Shares of cloud software company 8x8 Inc. (NASDAQ: EGHT) slumped on Monday due to an analyst downgrade. This comes a few months after the company was reported to be exploring a sale, which prompted to stock to surge. As of 3:26 p.m., 8x8 stock was down 11.3%.
Investment bank William Blair downgraded shares of 8x8 to market perform, down from a previous rating of outperform. This rating lines up with Morgan Stanley, which initiated the stock at equal-weight in April. The downgrade may have something to do with the stock being up considerably over the past few years.
8x8, which specializes in cloud-based communications services, is a fast-growing company that was profitable until recently. It has posted a net loss of $3 million over the past twelve months, but achieved a six-year streak of profitability prior to 2016. The stock has surged despite these losses due to its consistent double-digit revenue growth.
This downgrade could be a sign that William Blair does not see the company being acquired as likely. Reuters reported in February that 8x8 was exploring a sale, but no further developments have surfaced since.
Image source: 8x8 Inc.
8x8 last reported earnings in January, beating analyst expectations across the board. The next report should come in late May, assuming the company maintains its reporting schedule from last year. 8x8 has yet to confirm the date.
Analyst upgrades and downgrades are usually nothing to get worked up about. As always, investors should do their own homework when considering buying a stock.
10 stocks we like better than 8x8When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and 8x8 wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of May 1, 2017