6. Concentrix Corporation (NASDAQ:CNXC)
Year to Date Gain: -52.02%
Number of Hedge Fund Holders: 25
Concentrix Corporation (NASDAQ:CNXC) provides technology-infused customer experience (CX) solutions globally. Their services include CX process optimization, technology innovation, automation, analytics, and business transformation. They operate across various communication channels like voice, chat, email, social media, and custom applications.
Concentrix Corporation (NASDAQ:CNXC) is one of the worst-performing tech stocks in 2024, having lost 52% in market value year to date. While providing technology-infused customer experience solutions, it has been under pressure on providing weaker-than-expected guidance for the fourth quarter and full year.
The technology and services company expects fourth-quarter earnings per share to range between $2.90 and $3.16, below analysts’ estimates of $3.48 a share. Likewise, it expects full-year earnings to range between $11.05 and $11.31, below analysts’ expectations of $11.71 a share. The decline underscores the challenges that Concentrix is facing, mainly due to clients’ commitments and offshoring strategies.
Concentrix Corporation (NASDAQ:CNXC) faces a challenging market environment characterized by stiff competition in providing customer experience solutions. Nevertheless, its revenue in the third quarter has shown signs of resilience, having increased 2.6% to $2.4 billion. The increase was driven by growth in the retail travel and e-commerce sectors.
Similarly, it is positioning itself to access higher-margin projects and provide better value to its clients and shareholders due to its focus on technology, AI integration, and transformative business opportunities. Future growth should be fueled by its strategic direction and the possibility of automation and consolidation.
As of Q2 2024 end, 25 out of the 912 hedge funds profiled by Insider Monkey had bought and owned Concentrix Corporation (NASDAQ:CNXC)’s shares. Lauren Taylor Wolfe’s Impactive Capital was the biggest shareholder due to its $243.40 million stake.
Here is what Investment management company First Pacific Advisors said about Concentrix Corporation (NASDAQ:CNXC) in its first quarter 2024 investor letter:
“Concentrix Corporation (NASDAQ:CNXC) is one of two top customer experience (CX) vendors globally. The company started managing call centers but has since evolved into a high-tech business process outsourcer (BPO) that also designs and manages customer-facing websites and apps, integrates the data, and optimizes a client’s customer interactions. The company was spun out from TD Synnex, another of the Fund’s core holdings, and we have always been impressed with the company’s innovation and growth. CX is a relatively new business model, and Concentrix has been rolling up smaller competitors. In March, 2023 they bought WebHelp, a leading European CX player, for $4.8B in cash and stock. We believe the WebHelp acquisition will help consolidate an industry where Concentrix and Teleperformance are the largest players. On Jan. 24, 2024 Concentrix reported Fiscal 2023 earnings that included weak 1% – 3% organic growth guidance for 2024. The market’s current concern about the potential of artificial intelligence to disrupt Concentrix’ core call center business has resulted in the underperformance in the shares across the industry. Concentrix has three turns of debt from the Webhelp deal which will be a problem if earnings deteriorate quickly. But Concentrix now trades at less than five times adjusted EPS. We think, but don’t know, that Concentrix’ domain knowledge and integration into customers’ workflows make for meaningful switching costs. We have held on to our Concentrix shares but have not added to the position.”
