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SmileDirectClub Stock Drops After Results Prompt Rating, Target Cuts

SmileDirectClub missed analyst estimates for the top and bottom lines. The dental-services company cited an April cyberattack and other factors.

Shares of SmileDirectClub  (SDC) - Get SmileDirectClub Inc Class A Report tumbled on Tuesday after the online dental-equipment maker missed analysts' estimates for the second quarter.

J.P. Morgan slashed its price target to $6 a share from $10 while reducing its rating to underweight from neutral. 

And William Blair analyst John Kreger cut his recommendation on the company to market perform from outperform. 

SmileDirectClub shares at last check were down 17% to $5.56. 

The Nashville company reported a second-quarter net loss of 14 cents a share on revenue of $174.2 million. 

Analysts surveyed by FactSet were expecting the company to report a net loss of 12 cents a share on revenue of $198.5 million. 

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For the year, the company expects revenue of $750 million to $800 million. FactSet's call for the year: $783.4 million.

The company said the April cyberattack and the "lasting economic effects from COVID on our target demographic" played a role in the company's quarterly results. 

But the company's CEO is optimistic about SmileDirectClub's prospects. 

The company aims to extend its telehealth platform for orthodontia by emphasizing customer experience, improving consumer perception around credibility and driving positive sentiment with its Challenger campaign, Chief Executive David Katzman said in a statement.

The company also plans to reallocate marketing dollars from Facebook  (FB) - Get Facebook, Inc. Class A Report to television as part of its Challenger marketing strategy. 

Sales and marketing as a percentage of total revenue is expected to be in the 50% to 55% range through the second half, SmileDirectClub said.