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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.