Samsara Stock Tumbles After a Beat-And-Raise Quarter. Here's Why
Samsara stock is trading lower Friday even after the cloud company disclosed higher-than-expected earnings and raised its full-year outlook.
Samsara (IOT) stock plunged 14% out of the gate Friday even after cloud company beat analysts' top- and bottom-line expectations for its fiscal first quarter and raised its full-year outlook.
In the three months ended May 4, Samsara saw its revenue increase 37.4% year-over-year to $280.7 million, while its ending annual recurring revenue (ARR) jumped 37.3% to reach $1.2 billion. Earnings came in at 3 cents per share, up from a loss of 2 cents per share in the year-ago period.
"We delivered a strong first quarter of the new fiscal year," Samsara co-founder and CEO Sanjit Biswas said in a statement. "As the strategic partner to the world's leading and most complex physical operations organizations, we are focused on delivering clear and fast return on investment (ROI) for our customers and improving their operations."
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The results handily beat analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $272 million and earnings of 1 cent per share.
As a result of its strong start to fiscal 2025, Samsara raised its outlook for the full year. The company now anticipates revenue in the range of $1.205 billion to $1.213 billion and earnings per share to arrive between 13 cents to 15 cents. This is up from its previous guidance of revenue in the range of $1.186 billion to $1.196 billion and earnings in the range of 11 cents to 13 cents per share.
Is Samsara stock a buy, sell or hold?
The tech stock is down nearly 10% for the year to date, but analysts remain upbeat. According to S&P Global Market Intelligence, the consensus analyst target price for IOT stock is $40.83, representing implied upside of more than 35% to current levels. Meanwhile, the consensus recommendation is a Buy.
William Blair analyst Dylan Becker is one of those with an Outperform (Buy) rating on IOT stock.
"Samsara reported a strong start to the year with results ahead of expectations and a full-year outlook raised by more than the quarterly performance," Becker wrote in a June 7 report. The analyst says the stock's post-earnings weakness can be attributed "to overblown expectations and the company's rich multiple. Longer term we believe Samsara's rare combination of fast revenue growth and margin improvement will drive outperformance to the market."
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