What happened
Shares of LivePerson (NASDAQ: LPSN) were up 21.9% as of 2 p.m. ET Thursday, according to data provided by S&P Global Market Intelligence, extending from yesterday's post-earnings pop fueled by both the broader market rally and multiple analysts upgrading shares of the conversational AI software specialist.
So what
Indeed, LivePerson just soared 19% only yesterday after the company announced a surprise second-quarter profit even as revenue fell a slightly better-than-expected 26.4% year over year. LivePerson also confirmed it signed 69 deals in the second quarter, including 33 new and 36 existing customer contracts. Three of those deals were for seven figures, and average trailing-12-month revenue per enterprise and mid-marke customer climbed 14% to $575,000. Management noted the company delivered these solid results after completing a recent restructuring plan and winding down noncore businesses in order to focus on its business-to-business (B2B) core.
Meanwhile, LivePerson scored a pair of analyst upgrades on the heels of the report. First, Roth MKM analyst Richard Baltry raised his rating on LivePerson shares to buy from neutral, maintaining his $6 price target -- a 26% premium from this morning's opening price -- pointing out the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) significantly exceeded expectations amid cost-cutting efforts.
Craig-Hallum analyst Jeff Van Rhee also raised his rating from "hold" to "buy," raising his price target to $7 per share. Van Rhee noted he was "encouraged" by LivePerson's relative core business strength and new AI-powered voice products, which have "sparked a lot of customer interest and materially expanded the [total addressable market]."
Now what
It helps that the broader market also rallied today -- with the entire Nasdaq Composite Index up more than 2% -- after an encouraging consumer price index report showed inflation rose less than expected last month. Many market pundits speculate that if inflation finally begins to show more tangible signs of cooling, it could also mean an end to a string of recent rate hikes by the U.S. Federal Reserve -- a development that would be widely considered a positive catalyst for tech stocks.
It's also noteworthy that with shares still down more than 45% year to date as of this writing, LivePerson is one of a small number of AI stocks that -- at least up until this week -- hadn't enjoyed a material rally as investors celebrated potential beneficiaries of the rise of generative AI solutions. If the business can continue demonstrating positive momentum in the coming quarters, these recent gains could be the start of a much longer trend.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends LivePerson. The Motley Fool has a disclosure policy.
