Price Target Changed • Nov 03
Price target increased to US$10.50 Up from US$9.00, the current price target is an average from 3 analysts. New target price is approximately in line with last closing price of US$10.36. The company is forecast to post a net loss per share of US$0.60 next year compared to a net loss per share of US$1.17 last year. Buying Opportunity • Sep 29
Now 22% undervalued after recent price drop Over the last 90 days, the stock is down 20%. The fair value is estimated to be US$8.12, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 4.0% over the last 3 years. Earnings per share has grown by 17%. Revenue is forecast to grow by 0.9% in a year. Earnings is forecast to grow by 49% in the next year. Seeking Alpha • Sep 15
Benefitfocus: How The Mighty Have Fallen Summary
Today, we put Benefitfocus, Inc. in the spotlight for the first time in four years.
The stock took a huge hit starting in early 2019 into the start of the pandemic and has never recovered since.
Are the shares now oversold? An investment analysis follows in the paragraphs below.
"The most critical time in any battle is not when I'm fatigued, it's when I no longer care." - Craig D. Lounsbrough
I got an inquiry on Benefitfocus, Inc. (BNFT) this week from a Seeking Alpha follower. The last piece I put on this cloud-based benefits management provider in the summer of 2018. We took profits in this name within the model portfolio of the Busted IPO Forum a few quarters later. This turned out to be fortuitous timing, as the stock and company have fallen on very hard times since. I have not really looked at it since. Is this equity now oversold? An analysis follows below.
Seeking Alpha
Company Overview:
Benefitfocus, Inc. is headquartered in Charleston, SC. The company provides cloud-based benefits management technology solutions for employers and health plans throughout the United States. The stock currently trades just south of $7.00 a share for an approximate market cap of $240 million.
August Company Presentation
Second Quarter Results:
On August 3rd, the company posted second quarter numbers. Benefitfocus had a GAAP quarterly net loss of 40 cents a share, more than a dime below the consensus. Revenues fell seven percent on a year-over-year basis to $56.6 million, roughly in line with expectations.
August Company Presentation
Here is the breakdown of the core revenue flows during the quarter.
Subscription revenue was $42.0 million, down 5% compared to the second quarter of 2021.
Platform revenue was $6.6 million, up 12% compared to the second quarter of 2021.
Professional services revenue was $8.0 million, down 25% compared to the second quarter of 2021.
Management also provided the following forward guidance.
August Company Overview
Analyst Commentary & Balance Sheet:
The company gets little attention from Wall Street. JPMorgan assumed coverage with a Neutral rating on BNFT late in May, with an $11 price target. Piper Sandler maintained its Hold rating on September 6th and cut its price target from $9 to $6 a share. The analyst at Sandler said her price target cut:
Reflects the company's Q2 results and guidance while also noting its lack of revenue growth, margin erosion and heavily Q4-weighted guidance. Benefitfocus also offers few actual data points to back up its assertion that FY23 growth will accelerate."
Those are the only two analyst firm ratings I can find on the stock so far in 2022.
Just over three percent of the outstanding float in the stock is currently held short. A beneficial owner purchased just over $5 million of shares in the stock in March of this year. Since then, the CFO has disposed of nearly $600,000 worth of his holdings in BNFT. Buying Opportunity • Sep 13
Now 21% undervalued after recent price drop Over the last 90 days, the stock is down 24%. The fair value is estimated to be US$8.21, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 4.0% over the last 3 years. Earnings per share has grown by 17%. Revenue is forecast to grow by 1.0% in a year. Earnings is forecast to grow by 49% in the next year. Major Estimate Revision • Sep 07
Consensus forecasts updated The consensus outlook for 2022 has been updated. 2022 expected loss increased from -US$0.52 to -US$0.60 per share. Revenue forecast unchanged at US$254.0m. Software industry in the US expected to see average net income growth of 7.0% next year. Consensus price target down from US$10.00 to US$8.50. Share price fell 5.0% to US$7.04 over the past week. Reported Earnings • Aug 04
Second quarter 2022 earnings: EPS misses analyst expectations Second quarter 2022 results: US$0.40 loss per share (up from US$0.50 loss in 2Q 2021). Revenue: US$56.6m (down 7.1% from 2Q 2021). Net loss: US$13.8m (loss narrowed 17% from 2Q 2021). Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 48%. Over the next year, revenue is forecast to grow 1.3%, compared to a 19% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has increased by 17% per year but the company’s share price has fallen by 34% per year, which means it is significantly lagging earnings. Buying Opportunity • Jul 22
Now 21% undervalued after recent price drop Over the last 90 days, the stock is down 29%. The fair value is estimated to be US$10.20, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 2.5% over the last 3 years. Earnings per share has grown by 20%. Revenue is forecast to decline by 1.1% in a year. Earnings is forecast to grow by 60% in the next year. Buying Opportunity • Jun 29
Now 20% undervalued after recent price drop Over the last 90 days, the stock is down 38%. The fair value is estimated to be US$9.73, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 2.5% over the last 3 years. Earnings per share has grown by 20%. Revenue is forecast to decline by 1.1% in a year. Earnings is forecast to grow by 60% in the next year. Buying Opportunity • May 11
Now 21% undervalued after recent price drop Over the last 90 days, the stock is down 23%. The fair value is estimated to be US$9.92, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 2.5% over the last 3 years. Earnings per share has grown by 20%. Revenue is forecast to decline by 0.8% in a year. Earnings is forecast to grow by 61% in the next year. Reported Earnings • May 04
First quarter 2022 earnings: EPS exceeds analyst expectations First quarter 2022 results: US$0.12 loss per share (down from US$0.11 loss in 1Q 2021). Revenue: US$61.2m (down 5.9% from 1Q 2021). Net loss: US$3.88m (loss widened 4.9% from 1Q 2021). Revenue was in line with analyst estimates. Earnings per share (EPS) surpassed analyst estimates by 29%. Over the next year, revenue is forecast to stay flat compared to a 36% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has increased by 20% per year but the company’s share price has fallen by 31% per year, which means it is significantly lagging earnings. Price Target Changed • Apr 27
Price target decreased to US$11.00 Down from US$14.50, the current price target is an average from 2 analysts. New target price is approximately in line with last closing price of US$11.32. Stock is down 20% over the past year. The company is forecast to post a net loss per share of US$0.38 next year compared to a net loss per share of US$1.17 last year. Board Change • Apr 27
High number of new and inexperienced directors There are 7 new directors who have joined the board in the last 3 years. The company's board is composed of: 7 new directors. 2 experienced directors. No highly experienced directors. Independent Chairman Doug Dennerline is the most experienced director on the board, commencing their role in 2014. The following issues are considered to be risks according to the Simply Wall St Risk Model: Lack of board continuity. Lack of experienced directors. Price Target Changed • Apr 08
Price target decreased to US$11.00 Down from US$14.50, the current price target is an average from 3 analysts. New target price is 9.2% below last closing price of US$12.12. Stock is down 16% over the past year. The company is forecast to post a net loss per share of US$0.38 next year compared to a net loss per share of US$1.17 last year. Reported Earnings • Mar 04
Full year 2021 earnings: Revenues exceed analysts expectations while EPS lags behind Full year 2021 results: US$1.17 loss per share (down from US$0.86 loss in FY 2020). Revenue: US$263.1m (down 1.9% from FY 2020). Net loss: US$38.6m (loss widened 38% from FY 2020). Revenue exceeded analyst estimates by 2.0%. Earnings per share (EPS) missed analyst estimates by 11%. Over the next year, revenue is expected to shrink by 3.0% compared to a 49% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has increased by 24% per year but the company’s share price has fallen by 40% per year, which means it is significantly lagging earnings. Reported Earnings • Mar 04
Full year 2021 earnings: Revenues exceed analysts expectations while EPS lags behind Full year 2021 results: US$1.17 loss per share (down from US$0.86 loss in FY 2020). Revenue: US$263.1m (down 1.9% from FY 2020). Net loss: US$38.6m (loss widened 38% from FY 2020). Revenue exceeded analyst estimates by 2.0%. Earnings per share (EPS) missed analyst estimates by 11%. Over the next year, revenue is expected to shrink by 3.0% compared to a 49% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has increased by 24% per year but the company’s share price has fallen by 40% per year, which means it is significantly lagging earnings. Reported Earnings • Nov 05
Third quarter 2021 earnings released: US$0.59 loss per share (vs US$0.19 loss in 3Q 2020) The company reported a poor third quarter result with increased losses, weaker revenues and weaker control over costs. Third quarter 2021 results: Revenue: US$62.0m (down 2.4% from 3Q 2020). Net loss: US$19.7m (loss widened 228% from 3Q 2020). Over the last 3 years on average, earnings per share has increased by 25% per year but the company’s share price has fallen by 37% per year, which means it is significantly lagging earnings. Executive Departure • Sep 07
Director Stephen Swad has left the company On the 2nd of September, Stephen Swad was replaced as CEO by Matthew Levin after less than a year in the role. As of June 2021, Stephen still personally held 136.09k shares (US$1.9m worth at the time). A total of 6 executives have left over the last 12 months. The current median tenure of the management team is 1.08 years, which is considered inexperienced in the Simply Wall St Risk Model. Under Stephen's leadership, the company delivered a total shareholder return of 31%. Reported Earnings • Aug 04
Second quarter 2021 earnings released: US$0.50 loss per share (vs US$0.38 loss in 2Q 2020) The company reported a poor second quarter result with increased losses, weaker revenues and weaker control over costs. Second quarter 2021 results: Revenue: US$60.9m (down 2.0% from 2Q 2020). Net loss: US$16.6m (loss widened 35% from 2Q 2020). Over the last 3 years on average, earnings per share has increased by 26% per year but the company’s share price has fallen by 31% per year, which means it is significantly lagging earnings. Executive Departure • Jul 13
Co-Founder Mason Holland has left the company On the 30th of June, Mason Holland's tenure as Co-Founder ended after 21.1 years in the role. We don't have any record of a personal shareholding under Mason's name. A total of 5 executives have left over the last 12 months. The current median tenure of the management team is less than a year, which is considered inexperienced in the Simply Wall St Risk Model. Price Target Changed • May 05
Price target decreased to US$13.00 Down from US$14.25, the current price target is an average from 6 analysts. New target price is 7.7% below last closing price of US$14.09. Stock is up 28% over the past year. Reported Earnings • May 05
First quarter 2021 earnings released: US$0.11 loss per share (vs US$0.34 loss in 1Q 2020) The company reported a decent first quarter result with reduced losses and improved control over expenses, although revenues were weaker. First quarter 2021 results: Revenue: US$65.1m (down 1.6% from 1Q 2020). Net loss: US$3.70m (loss narrowed 67% from 1Q 2020). Over the last 3 years on average, earnings per share has increased by 21% per year but the company’s share price has fallen by 26% per year, which means it is significantly lagging earnings. Executive Departure • Mar 26
Independent Director has left the company On the 23rd of March, Ana White's tenure as Independent Director ended after 2.2 years in the role. As of December 2020, Ana personally held only 3.18k shares (US$46k worth at the time). A total of 4 executives have left over the last 12 months. Reported Earnings • Mar 10
Full year 2020 earnings released: US$0.86 loss per share (vs US$1.40 loss in FY 2019) The company reported a decent full year result with reduced losses and improved control over expenses, although revenues were weaker. Full year 2020 results: Revenue: US$268.1m (down 9.3% from FY 2019). Net loss: US$28.0m (loss narrowed 39% from FY 2019). Over the last 3 years on average, earnings per share has increased by 15% per year but the company’s share price has fallen by 18% per year, which means it is significantly lagging earnings. Analyst Estimate Surprise Post Earnings • Mar 10
Revenue beats expectations, earnings disappoint Revenue exceeded analyst estimates by 0.5%. Earnings per share (EPS) missed analyst estimates by 9.5%. Over the next year, revenue is forecast to grow 3.3%, compared to a 17% growth forecast for the Software industry in the US. Is New 90 Day High Low • Feb 10
New 90-day high: US$14.74 The company is up 38% from its price of US$10.70 on 11 November 2020. The American market is up 15% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Software industry, which is up 17% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is US$15.57 per share. Executive Departure • Jan 28
Director has left the company On the 26th of January, Barry Libert's tenure as Director ended after less than a year in the role. We don't have any record of a personal shareholding under Barry's name. A total of 3 executives have left over the last 12 months. Is New 90 Day High Low • Dec 04
New 90-day high: US$14.71 The company is up 46% from its price of US$10.10 on 04 September 2020. The American market is up 10.0% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Software industry, which is up 5.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is US$12.89 per share. Is New 90 Day High Low • Nov 18
New 90-day high: US$12.30 The company is up 10.0% from its price of US$11.15 on 20 August 2020. The American market is up 8.0% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Software industry, which is up 7.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is US$12.23 per share. Price Target Changed • Nov 07
Price target lowered to US$16.83 Down from US$19.00, the current price target is an average from 7 analysts. The new target price is 67% above the current share price of US$10.08. As of last close, the stock is down 57% over the past year. Reported Earnings • Nov 07
Third quarter 2020 earnings released: US$0.19 loss per share The company reported a decent third quarter result with reduced losses and improved control over expenses, although revenues were weaker. Third quarter 2020 results: Revenue: US$63.6m (down 11% from 3Q 2019). Net loss: US$6.00m (loss narrowed 52% from 3Q 2019). Over the last 3 years on average, earnings per share has increased by 10% per year but the company’s share price has fallen by 27% per year, which means it is significantly lagging earnings. Analyst Estimate Surprise Post Earnings • Nov 07
Revenue beats expectations, earnings disappoint Revenue exceeded analyst estimates by 4.2%. Earnings per share (EPS) missed analyst estimates by 28%. Over the next year, revenue is forecast to stay flat compared to a 17% growth forecast for the Software industry in the US.