SNCR at 0.55X P/S is Trading Dirt Cheap: Buy, Sell or Hold the Stock?

Synchronoss Technologies (SNCR Quick QuoteSNCR – Free Report) stock is trading at a significant discount, as suggested by the Value Score of A. In terms of the forward 12-month Price/Sales, SNCR is trading at 0.55X, lower than its median of 0.59X and the Zacks Computer & Technology sector’s 6.32X.

SNCR is cheaper than its peers including Microsoft (MSFT Quick QuoteMSFT – Free Report) and Dropbox (DBX Quick QuoteDBX – Free Report) , both offering personal cloud services integrated with their respective platforms. Microsoft and Dropbox are currently trading at a P/S of 9.73X and 3.15X, respectively.

SNCR Shares Trading at Discount

 

Image Source: Zacks Investment Research

 

However, Synchronoss shares have dropped 4.7% year to date, underperforming the broader sector’s decline of 0.9% and Internet Software industry’s appreciation of 8.2% amid challenging macroeconomic conditions. The shares have outperformed Microsoft and Dropbox shares of which declined 6.9% and 13.5%, respectively.

SNCR Stock Lags Sector & Industry

 

Image Source: Zacks Investment Research

 

Synchronoss shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend.

SNCR Trades Below 50-day & 200-day SMAs

 

Image Source: Zacks Investment Research

 

Let us dig deep to find out what investors should do with the SNCR stock.

Strong Portfolio & Rich Partner Base Aids SNCR

Synchronoss’ strong portfolio and rich partner base are expected to help the stock’s prospects. SNCR’s number of cloud subscribers grew 5.1% year over year in the third quarter of 2024, which drove 8% year-over-year growth in total revenues. Synchronoss’ 75% of revenues are under contract for at least four years, which boosts top-line visibility.

In January 2025, SNCR launched the next-generation Synchronoss Personal Cloud platform at CES 2025, offering enhanced AI-powered photo editing tools, an improved interface and advanced backup functionalities.

Available globally through carriers like AT&T (T Quick QuoteT – Free Report) , Verizon and SoftBank, the platform now supports more than 11 million subscribers, with features like iPhone storage optimization and Android’s improved folder backup. The platform prioritizes data privacy and security, providing users with a seamless, ad-free experience and customizable options to manage and enhance its digital content.

SNCR’s rich partner base is noteworthy. In December 2024, Synchronoss announced a three-year contract extension with AT&T for its Personal Cloud solution, enabling secure backup, management, and sharing of content across devices and the cloud. In the third quarter of 2024, SNCR secured a three-year contract extension with SFR, part of Altice France, which operates high-speed fixed and mobile networks serving over 27 million users.

SNCR Raises 2024 Guidance, Estimate Revision Trends Steady

Synchronoss raised 2024 revenue guidance to between $172 million and $175 million, up from previous guidance in the $170-$175 million. Recurring revenues are expected between 90% and 92% of total revenues (previous guidance 85-90% range). Adjusted gross margin is expected between 77% and 78%, up from the previous 73-77% guidance range.

The Zacks Consensus Estimate for 2024 earnings is pegged at 73 per share, unchanged over the past 30 days. The consensus mark for 2024 revenues is pegged at $173.03 million, suggesting a 19.32% decline over 2023.

The Zacks Consensus Estimate for 2025 earnings is pegged at $1.46 per share, unchanged over the past 30 days. The consensus mark for 2025 revenues is pegged at $180.87 million, suggesting 4.53% growth over 2024.

SNCR’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing in the remaining ones, the average negative surprise being 25.76%.
 

 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

SNCR Shares: Buy, Sell or Hold?

SNCR’s third-quarter 2024 results saw a decline in professional services revenues, although recurring revenues went up. While the contract extension with AT&T is positive and Softbank’s growing user base, we believe growth is slowing in Verizon, which is a concern. Significant dependence on Verizon, AT&T and partners for growth is a headwind.

Unfavorable forex amid a challenging macroeconomic environment doesn’t bode well for Synchronoss’ prospects. Revenue growth is expected to remain muted due to increasing competition in the storage and backup services domain. Synchronoss’ focus on reducing debt level is keeping investments in product development in check, which limits growth prospects in the near term.

Synchronoss currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.