Right now, millions of kids around the world are trying to guess what’s inside the tightly wrapped packages with their names on from/to tags under the Christmas tree. It’s fairly easy to guess what is inside the box that motivated four directors to purchase Everbridge, Inc. (EVBG) stock.
Everbridge is a global company that provides enterprise software applications that automate and accelerate organizations’ operational response to critical events in order to Keep People Safe and Organizations Running. During public safety threats such as active shooter situations, terrorist attacks or severe weather conditions, as well as critical business events including IT outages, cyber-attacks or other incidents such as product recalls or supply-chain interruptions.
The quartet of insiders bought a combined 22,700 shares on EVBG for a little more than $1.5 million. Prior to the four directors purchasing the software company’s shares, 100% of the previous insider action was selling to the tune of $416 million. (1) That’s about as lopsided as it gets.
On December 9th, Everbridge announced Chief Executive Officer (CEO) David Meredith and said the CEO’s resignation had nothing to do with EBBG’s finances. “On a preliminary basis, the Company anticipates revenue growth of 20% to 23% in 2022, not including the impact of any potential future acquisitions. Mr. Meredith’s resignation is not related to any matter regarding the Company’s financial condition, reported financial results, internal controls or disclosure controls and procedures.” (2)
Well, Meredith going bye-bye might not have been related to the company’s finances, but whoa did his leaving have an impact on EVBG’s stock price. It got beat like Tyron Woodley by Jake Paul (Google it). Shares closed at $115.37 on December 9, 2021 and opened flat on their face at $68.28 the next day. Ouch, that had to hurt.
One week later, directors Bruns Grayson, Kent Mathy, Allison Dean, and Sharon Rowlands said give me some of that, becoming the first insider buyers in the company’s short history. (Everbridge’s initial public offering (IPO) was September 16, 2016.)
As it stands now, Wall Street has a one-year price target of $115 on Everbridge. EVBG closed on Monday, December 20, 2021 at $66.65. (3) Analysts believe the software company will lose $0.06 per share in 2022 with sales climbing 23% to $453.49 million. (4)
Since earnings per share (EPS) are expected to be underwater, we’ll focus on the revenue side of the income statement to get a sense of EVBG’s potential to hit the Street’s consensus $115 price target. At its depressed price, relative to Everbridge’s recent price history, the stock is valued at 6.95 times sales (P/S) versus 10.2 for its peer group.
If Everbridge hits analysts’ 2022 revenue target, it would trade at $81.74 and $119.96, using its and the industry P/S ratios respectively.
Overall: Some uncertainty surrounds Everbridge, Inc. (EVBG) with their CEO stepping aside on short notice. If, however, it is true that Meredith’s departure had nothing to so with the financial shape of the software company, then the current price drop could prove to be a decent buying opportunity. At least, it appears four directors see value in EVBG shares at its current level.
Everbridge, Inc. (EVBG) is only appropriate for investors with an above-average taste for volatility. Based on our experience and the market’s current trend, it would not be surprising to see EVBG move another leg lower before the recovery process, if there is one, begins.
1 – https://www.secform4.com/insider-trading/1437352.htm
2 – https://ir.everbridge.com/news-releases/news-release-details/everbridge-announces-ceo-transition
3 – https://finance.yahoo.com/quote/EVBG?p=EVBG
4 – https://finance.yahoo.com/quote/EVBG/analysis?p=EVBG