MW Informatica's stock plunges after 'messy' Q4 results, but analysts see positives

By James Rogers

Informatica's stock is on pace for its largest daily percentage decrease on record

Shares of Informatica Inc. have tumbled following its fourth-quarter revenue miss and weaker-than-expected guidance Thursday - but analysts still see positives despite the company's disappointing results.

Notably, the data-management-software company's revenue fell 3.8% year-over-year amid declining subscription revenues. "The renewal rates were lower than forecasted," Informatica (INFA) Chief Executive Amit Walia said during a conference call to discuss the results, according to a FactSet transcript. "As we work through the complexity of our business-model transformation to cloud-only, some execution issues related to the renewals were identified and are underway to be addressed."

Informatica's stock plunged after the results and is down 30.9% Friday. The company's shares are on pace for their largest daily percent decrease on record, according to Dow Jones Market Data, citing available data back to Oct. 27, 2021.

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But analysts are still eyeing positives amid the Informatica selloff. In a note released Friday, Truist Securities lowered its Informatica estimates and price target to $24 from $34 but maintained its buy rating. "We reiterate our Buy rating on the belief that low liquidity has accentuated the selloff and stability (rather than upside) could drive price appreciation from current levels," wrote Truist Securities analyst Miller Jump.

The analyst acknowledged that the results came as a surprise. "We can't say we saw this coming on our first INFA earnings call post-initiation," he wrote. "The company delivered a messy Q4 with a number of moving parts and a guide below expectations for 2025."

D.A. Davidson lowered its Informatica price target to $20 from $25 Friday, but maintained its neutral rating for the company. "Management noted that this past quarter did not unfold as they had anticipated, which was riddled with execution issues with cloud renewals that they're expected to address more in 2025, along with faster than expected churn within self-managed and maintenance ARR [Annual Recurring Revenue]," wrote D.A. Davidson analyst Gil Luria.

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However, Luria noted that profitability was "a point of positivity" for Informatica in the quarter and highlighted the company's non-GAAP operating margin, which was 37.9%, up from 36.4% in the same period last year. But he added that Informatica's operating margins "are expected to compress notably next quarter."

Of 18 analysts surveyed by FactSet, nine have an overweight or buy rating, and nine have a hold rating for Informatica.

Informatica shares are down 49% in the last 12 months, compared with the S&P 500 index's SPX gain of 22.4%. Shares of rival International Business Machines Corp. $(IBM)$ are up 39.3% in the last 12 months, while Microsoft Corp. $(MSFT)$ is up 0.9%.

-James Rogers

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February 14, 2025 11:39 ET (16:39 GMT)

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