eGain Corporation

EGAN Details

eGain Corporation (NASDAQ: EGAN) uses an innovative Software as a Service (SaaS) platform that is powered by deep digital, artificial intelligence (AI), and knowledge capabilities to automate client engagement.

Why should Investors Sell?

• Decrease in Bottom Line: The company had recorded a net loss of USD 0.83 million in Q2FY22 compared to a gain of USD 1.61 million in Q2FY21 due to the high cost of revenue and operating expenses.
• Dependency on Small Customers: The company rely on a small number of clients for a large percentage of its revenue; therefore, the loss of any of these customers, or failure to acquire new significant customers, might harm its income and impair its business.
• Weak Margins: As the company had incurred loss in Q2FY22, its EBITDA, operating, and net margins are negative compared to positive industry margins.
• Highly Competitive market: The company’s business model of customer engagement software is highly competitive. There are no significant hurdles of entry in this industry. Hence established or new companies may enter the market in future.

Valuation Methodology: Enterprise Value/Sales Multiple Based Relative Valuation

Source: Analysis by Kalkine Group

Stock Recommendation:

Despite increasing revenue, the company has posted higher losses, a jump in operating expenses and negative margins. Considering the current valuation and bearish technical indicators, we recommend a "SELL" rating on the stock at the closing price of USD 12.75 as of February 04, 2022.

EGAN’s 1-Year Technical Price Chart. (Source: REFINITIV, Analysis by Kalkine Group)

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.