FBN Securities lowers Five9 stock price target on earnings guidance cut

FBN Securities has reduced its price target for Five9, Inc. (FIVN) shares to $37 from $40, while keeping the rating at "Outperform." The firm noted a mixed third-quarter 2026 performance, which included a revenue increase and a raised earnings forecast, but also a cut in fiscal year 2026 earnings guidance. The acquisition of Level AI for $325 million also played a role in the guidance adjustment.

Subscription growth increased by 16% year-over-year in Q3, and AI revenue expanded at an even faster rate, reaching 17% of subscription revenue. The company's FY 2026 earnings estimate dropped to $0.88 to $0.92, about 10% lower than the pre-print consensus of $1.00. This guidance reduction aligns with the sentiment of 20 analysts who have lowered their earnings forecasts for the upcoming period.

FBN Securities also lowered its fiscal year 2027 and 2028 earnings estimates to $3.84 and $4.18, respectively, from $3.85 and $4.39, though these estimates do not account for Level AI, which is expected to reduce FY 2027 earnings by approximately $0.30, or 8%, due to losses in interest income.

The $37 target implies a valuation of about 9.6 times FY 2027 earnings and 2.0 times enterprise value to FY 2027 revenue. Despite a recent drop to $28.13, the stock is deemed undervalued by InvestingPro's Fair Value assessment. Investors can find more details in Five9's Pro Research Report, one of over 1,400 reports on the platform.

Meanwhile, Five9 reported third-quarter 2026 adjusted earnings of $0.82 per share on $323.3 million in revenue, beating Wall Street expectations of $0.80 per share and $319.04 million in revenue.

Despite these strong results, the company provided a more cautious full-year profit outlook and announced a $325 million acquisition of Level AI, which garnered significant investor interest. AI revenue growth surged to 91% year-over-year, contributing $180 million to annual recurring revenue. Needham maintained a "Buy" rating with a $40.00 price target, highlighting the company's robust AI growth, while DA Davidson cut its price target to $30.00 with a "Neutral" rating due to concerns surrounding the acquisition.

These events underscore a period of mixed fortunes for Five9, marked by solid revenue performance and strategic moves influencing investor perception.