Down 28% in two days: Is the Nitro share price crash a buying opportunity?

Is it time to buy Nitro's shares?

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The Nitro Software Ltd (ASX: NTO) share price has tumbled deep into the red again on Wednesday.

In afternoon trade, the document productivity software company's shares down a further 7% to $1.17.

This means the Nitro share price is now down a very disappointing 28% over the last two trading sessions.

Investors have been selling the company's shares after it downgraded its FY 2022 annual recurring revenue (ARR) guidance for FY 2022.

Is the Nitro share price crash a buying opportunity?

The team at Goldman Sachs believe the Nitro share price crash has created a very attractive buying opportunity for investors.

According to a note, its analysts have retained their buy rating with a revised price target of $2.05.

Based on the latest Nitro share price, this implies potential upside of 75% for investors over the next 12 months.

Why is Goldman still bullish?

While Goldman was disappointed with the update it saw enough to remain positive. Particularly given that the company now has a clear path to breakeven.

It explained:

In our view, today's update should serve to re-base market expectations both in terms of NTO's growth outlook (lower) and its progression to cash flow breakeven (sooner), which we see as key changes to NTO's growth narrative going forward.

While digestion of another quarter of sales execution issues may require consecutive quarters of strong performance to rectify, we see the new guidance range as providing a lower hurdle for NTO to clear going forward while operating more efficiently closer to cash flow breakeven.

We think that NTO's cost out programme largely answers questions on balance sheet risk, with improving execution (within NTO's control) and more benign macro conditions (out of NTO's control) dictating NTO's ability to beat and raise ARR guidance going forward.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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