Forescout Technologies, Inc. Class Action Lawsuit
- Company Name
- Forescout Technologies, Inc.
- Stock Symbol
- Class Period
- February 7, 2019 to October 9, 2019
- Northern District of California
On January 2, 2020, the Forescout Technologies, Inc. class action lawsuit was filed charging Forescout and certain of its officers with violations of the Securities Exchange Act of 1934. The Forescout class action lawsuit was commenced in the Northern District of California on behalf of purchasers of Forescout securities between February 7, 2019 and October 9, 2019 (the “Class Period”) and is captioned Sayce v. Forescout Technologies, Inc., et al., No. 20-cv-00076.
Forescout provides network security products and services through distributors and resellers in the Americas, Europe, Middle East, Africa, Asia Pacific region, and Japan.
The Forescout class action lawsuit alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Forescout’s business and operations. Specifically, defendants failed to disclose that Forescout was experiencing significant volatility with respect to large deals and issues related to the timing and execution of deals in Forescout’s pipeline, especially in Europe, Middle East, and Africa (“EMEA”), which was reasonably likely to have a material negative impact on Forescout’s financial results. As a result of this information being withheld from the market, Forescout securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $45 per share.
Then on October 10, 2019, before the market opened, Forescout announced its preliminary third quarter 2019 (“3Q19”) financial results, lowering its 3Q19 revenue guidance to $90.6 million to $91.6 million, compared to prior revenue guidance of $98.8 million to $101.8 million and market consensus estimates of $100.52 million. In explaining these results, defendants cited “extended approval cycles [that] pushed several deals out of the third quarter,” which “was most pronounced in EMEA.” On this news, Forescout’s stock price fell $14.63 per share, or more than 37%, to close at $24.57 per share on October 10, 2019.
Subsequently, on October 16, 2019, UBS cut its price target for Forescout from $50 to $33 per share, stating that “[e]xecution credibility has been undermined” and has created “a likely frustrating valuation overhang,” which will require several quarters to “rebuild investor confidence.” Then on November 6, 2019, Forescout reported its 3Q19 results and downgraded its fiscal 2019 financial guidance significantly, explaining that “several seven digit deals did not close as expected” and acknowledging that large deal volatility and delayed deals were an ongoing issue for Forescout.
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