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On Thursday, JMP Securities analyst maintained a Market Outperform rating for Bandwidth Inc. (NASDAQ:BAND) with a steady price target of $36.00, representing a potential 163% upside from the current price of $13.76. This decision follows Bandwidth’s release of first-quarter results for the year 2025, which surpassed market expectations. According to InvestingPro data, analysts broadly maintain a positive outlook, with the company expected to return to profitability this year. The company reported a non-GAAP EPS of $0.36, beating the consensus estimate of $0.27. Adjusted EBITDA reached $22 million, compared to the anticipated $17 million. InvestingPro analysis shows Bandwidth’s strong financial health, with a current ratio of 1.34 indicating sufficient liquidity to meet short-term obligations.
Bandwidth’s revenue for the quarter was $174 million, a 2% year-over-year increase and higher than the expected $169 million. This growth rate, however, represents a slowdown from the previous quarter’s 27% increase. The Cloud Communications segment contributed $133 million to the overall revenue, which was above the consensus of $131 million, marking a 4% rise year-over-year. In contrast, Messaging Surcharges revenue fell by 4% year-over-year to $41 million, which was still ahead of the $38 million consensus.
Despite these positive figures, Bandwidth experienced a free cash flow of negative $13 million for the quarter, which was below the consensus forecast of negative $1 million. In response to the earnings report, Bandwidth shares saw an approximately 12% increase after a year-to-date decline of 19%, which contrasts with the Russell 3000’s 5% decrease over the same period. The analyst’s reiteration of the Market Outperform rating reflects confidence in Bandwidth’s performance and future prospects, despite the mixed results in cash flow and the deceleration in revenue growth. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with additional insights and detailed valuation metrics available in the comprehensive Pro Research Report, which covers over 1,400 US stocks.
In other recent news, Bandwidth Inc. reported impressive financial results for the first quarter of 2025, beating earnings per share (EPS) estimates with a reported EPS of $0.36, surpassing the expected $0.26. The company also exceeded revenue forecasts, achieving $174 million compared to the anticipated $169 million. This strong performance led Bandwidth to raise its full-year revenue and EBITDA guidance, projecting revenue between $745 million and $760 million and an EBITDA forecast of $87 million. Needham initiated coverage on Bandwidth with a Buy rating and a $20 price target, citing the company’s growing free cash flow and favorable market trends in voice applications as key factors for sustained growth. Bandwidth’s unique offerings, such as the Maestro operating system and global voice network, are seen as competitive advantages that could help the company capture more market share. Despite macroeconomic uncertainties, Bandwidth’s strategic focus on AI and messaging services is contributing to its robust financial performance. The company is also expanding its enterprise voice business, which is experiencing significant traction and is expected to drive further growth.
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