Avepoint stock price target raised to $20 from $15 by TD Cowen

On Tuesday, TD Cowen exhibited confidence in Avepoint Inc. (NASDAQ:AVPT), as the firm’s analyst J. Derrick Wood increased the price target for the company’s stock to $20.00, up from the previous $15.00, while reiterating a Buy rating. The revision follows Avepoint’s third-quarter performance, which showcased revenue growth of 21.13% and impressive gross profit margins of 74.61%, surpassing both TD Cowen’s and the Street’s expectations. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period.

Avepoint’s go-to-market (GTM) restructuring, which took place over the summer, was initially expected to cause disruptions; however, the company managed to deliver robust results, particularly from its Federal vertical. Despite a projected deceleration in new bookings growth for the fourth quarter to the mid-teens percentage range, compared to previous quarters in the fiscal year 2024, the outlook remains solid. InvestingPro analysis reveals the company maintains strong financial health with a current ratio of 1.75 and holds more cash than debt on its balance sheet, suggesting operational stability despite the restructuring.

Avepoint’s stock has experienced a decline of approximately 15% since the third-quarter announcement but has seen some recovery since the start of the year, with an impressive year-to-date return of 12.66% and a remarkable one-year return of 133.67%. The stock is currently trading at around 5 times its expected calendar year 2025 enterprise value to software revenue (EV/CY25E Software (ETR:SOWGn) Revenue). Based on InvestingPro Fair Value analysis, the stock appears to be trading above its Fair Value, with 12 additional ProTips available to subscribers for deeper insights into the company’s valuation and growth prospects. The leadership changes, including the Chief Financial Officer and various sales executives, did not significantly impact the third-quarter performance as initially feared.

The new Chief Revenue Officer (CRO) at Avepoint is pushing for larger cross-selling initiatives, which could enhance revenue efficiency. However, the company’s foray into artificial intelligence (AI) with new AI agent offerings, such as Data Fabric, Process HQ, and RAG, is still in the early stages, and significant monetization may take time to positively affect the bottom line. The potential for disruption in the Process Automation space due to the larger AI Agent theme is also a point of consideration.

TD Cowen notes that further workforce reductions add an element of risk, and there have been indications of a slowdown in growth within the U.S. Federal vertical. For the fourth quarter, the firm anticipates revenue to meet expectations, with the possibility of variability in billings, which are modeled to grow by 14%. Investors can access comprehensive analysis of AVPT and 1,400+ other US stocks through InvestingPro’s detailed Research Reports, which provide actionable insights and key metrics for informed decision-making. With the stock trading at approximately 5 times EV/CY25E Software Revenue and considering the company’s moderate to low-teens software growth profile, alongside negligible free cash flow generation, TD Cowen maintains a Hold rating and a price target of $43, which is about 6 times EV/CY25E Software Revenue.

In other recent news, AvePoint Inc., a specialist in data security and governance, has reported significant developments. The company has applied for a dual listing on the Singapore Exchange (OTC:SPXCY) Securities Trading Limited (SGX-ST), a strategic move to expand its presence in the Asia-Pacific region. It’s worth noting that no final decision has been made regarding the listing’s timing, terms, or conditions.

Simultaneously, AvePoint has demonstrated robust financial performance in its Q3 earnings. The company reported total revenues of $88.8 million, a 22% increase from the previous year. SaaS revenue, contributing to 69% of the total revenues, saw a remarkable growth of 45% year-over-year. The company’s total Annual Recurring Revenue (ARR) also increased by 23% from the prior year, reaching $308.9 million.

In the wake of these developments, AvePoint’s leadership has expressed optimism, targeting GAAP profitability by 2025 and raising full-year revenue and ARR guidance. These recent developments underscore AvePoint’s ongoing efforts to strengthen its market presence and provide additional opportunities for investors.

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