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Investing.com - Maxim Group initiated coverage on Alliance Entertainment Holding Corp. (NASDAQ:AENT) with a Buy rating and a price target of $10.00 on Tuesday. The stock, currently trading at $3.77, has shown significant momentum with a 7.7% gain over the past week, according to InvestingPro data.
The research firm describes Alliance Entertainment as "a play on nostalgia, ownership and fandom," noting that the company is a physical media platform and distributor that benefits from renewed demand driven by these factors, along with a rich content library and strong licensing capabilities. The company generates annual revenue of $1.07 billion, though InvestingPro data shows it operates with relatively thin gross margins of 11.5%.
Maxim Group expects Alliance Entertainment’s revenue to bottom in fiscal year 2026, with growth resuming in fiscal year 2027, driven by collectibles and exclusive studio deals. The firm forecasts adjusted EBITDA growing to $51.6 million in FY27, from $24.3 million in FY24, and GAAP EPS growing to $0.51 in FY27, from $0.09 in FY24. For deeper insights into AENT’s growth potential and 8 additional exclusive ProTips, visit InvestingPro.
As of March 31, 2025, Alliance Entertainment had $2.0 million in cash and $75.2 million in debt, with Maxim Group believing that operations and growth can be funded without raising capital.
The $10 price target represents a price-to-earnings multiple of 19.6x Maxim’s FY27 estimate, with the firm noting that shares currently trade at 7.4x their FY27 EPS estimate, a discount to the peer median of 12.1x.
In other recent news, Alliance Entertainment Holding Corporation reported its financial results for the third quarter of fiscal year 2025, marking a return to profitability with a net income of $1.9 million, or $0.04 per share. This is a significant improvement from the net loss of $3.4 million in the same quarter last year. Revenue for the quarter was $213 million, slightly up from $211.2 million in Q3 FY24. The company’s gross profit increased by 3.7% year-over-year to $29.1 million, and adjusted EBITDA rose 66% to $4.9 million. Alliance Entertainment also announced the appointment of Robert Oram as Executive Vice President, a strategic move aimed at enhancing the company’s filmed entertainment sales and distribution. Oram previously held a leadership role at Paramount Pictures Home Entertainment and is expected to drive the company’s exclusive distribution agreement with Paramount. Alliance’s direct-to-consumer fulfillment now contributes 40% of gross revenue, reflecting its expanding market presence. The company is focusing on building infrastructure and partnerships to capitalize on the growing demand for physical media.
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