JPM cuts Sinch to 'neutral' on looming risks, shares drop
20/01/2023 09:45
** J.P.Morgan downgrades Swedish cloud communications
specialist Sinch SINCH.ST to "neutral" from "overweight" as it
sees risk factors ahead, sending the stock down 7%
** The broker expects recent large customer contract
repricing to hit Q4 results, doubting Sinch will deliver a
sequential gross profit growth improvement in the quarter
** JPM says the macro backdrop may impact the outlook, as it
looks for a better re-entry point
** It also fears certain CPaaS (communications platform as a
service) growth drivers are more discretionary than the market
appreciates
** The brokerage says the recent share rally, with shares
+220% off October 2022 lows, feels "overextended"
** It says the drivers of the sharp share rebound are the
reassuring Q3 results that stemmed the consensus downgrade
cycle, and a major short squeeze
** The company will report FY results on Feb. 16
** Out of 10 analysts that cover Sinch, five rate it "strong
buy"/"buy", four "hold", and one "sell"
(Reporting by Marta Frackowiak)
((marta.frackowiak@thomsonreuters.com))