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On Friday, Ascendiant Capital adjusted its price target for Genasys Inc. (NASDAQ: NASDAQ:GNSS), reducing it to $5.50 from the previous $6.00 while maintaining a Buy rating. Currently trading at $1.74, the stock sits well below analyst targets ranging from $4.00 to $5.50. The decision was influenced by a forward price-to-earnings (P/E) multiple of 22 times the firm’s fiscal year 2027 earnings per share estimate of $0.25.
The research firm highlighted that this multiple aligns with Genasys’s estimated long-term earnings growth rate, suggesting a price-to-earnings growth (PEG) ratio of approximately 1. According to InvestingPro data, the company faces significant challenges with a weak financial health score and a concerning 55% decline over the past six months. Ascendiant Capital believes this valuation effectively balances the company’s risks with its growth prospects and significant potential opportunities.
Edward Woo, the analyst at Ascendiant Capital, explained the rationale behind maintaining the Buy rating, stating, "Valuation positive: We are maintaining our BUY rating, but lowering our 12-month price target to $5.50 from $6.00, which is based on a forward P/E multiple of 22x our FY27 EPS estimate of $0.25."
The adjustment comes as investors and analysts continue to evaluate Genasys’s performance and potential in the market. The company’s stock remains under observation as it navigates its growth trajectory amid varying market conditions.
In other recent news, Genasys Inc. reported a challenging second quarter for fiscal year 2025, with both earnings and revenue failing to meet analyst expectations. The company posted an earnings per share (EPS) of -0.14, which was below the forecasted -0.12. Revenue also fell short, coming in at $6.9 million compared to the anticipated $8.51 million. Despite these setbacks, Genasys saw growth in its hardware and software segments, with hardware revenues increasing 17% year-over-year and software revenues growing 29% compared to the same period last year. The company expects significant revenue recognition in the third and fourth quarters, with projections of record quarterly revenue in Q4. Genasys has also secured a $4 million bridge loan to support ongoing projects, including a major initiative in Puerto Rico. Additionally, the company is optimistic about its Crow’s AHD program, which is expected to contribute $10-15 million annually. Despite the current revenue shortfall, Genasys remains confident in its growth strategy, anticipating improvements in future quarters.
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