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On Thursday, Benchmark analyst Mark Palmer adjusted the price target for CompoSecure Inc. (NASDAQ:CMPO) shares, bringing it down to $14.00 from the previous $17.00. Despite the reduction, Palmer has maintained a Buy rating on the company’s stock. According to InvestingPro data, the stock has shown remarkable strength with a 222.75% return over the past year, though it currently trades at $12.02.
Palmer’s reassessment of the price target was based on a 9x EV/EBITDA multiple applied to the forecasted FY25 adjusted EBITDA of $145.6 million. The new target reflects a more conservative valuation compared to the earlier estimate, aligning it with the firm’s adjusted financial expectations for CompoSecure. InvestingPro analysis indicates the stock is fairly valued, with current EV/EBITDA at 10.96x and strong liquidity metrics, including a healthy current ratio of 2.28.
The analyst’s decision to uphold the Buy rating on CompoSecure’s stock is influenced by the track record of the company’s leadership. Palmer specifically cited the accomplishments of Mr. Cote during his tenure at Honeywell (NASDAQ:HON) and Vertiv Holding, suggesting that investors who are betting on the company due to the potential upside associated with Cote’s involvement are likely to find their valuation justified. For deeper insights into CMPO’s leadership and financial health, access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks.
The endorsement of CompoSecure’s management and the maintained Buy rating indicate that, despite the lower price target, Benchmark sees ongoing potential in the company’s stock. The analyst’s comments underline a belief in the strategic capabilities of the leadership to positively impact CompoSecure’s financial performance and market position.
CompoSecure’s investors are thus presented with a mixed update: a lowered price target suggesting a tempered short-term valuation, alongside continued confidence in the company’s longer-term prospects under its current management. The market’s response to this update will be observed in the company’s stock performance on the NASDAQ in the coming days.
In other recent news, CompoSecure Inc. reported its fourth-quarter and full-year 2024 earnings, which fell short of analysts’ expectations for both earnings per share (EPS) and revenue. The company posted an EPS of $0.20, missing the forecast of $0.22, and reported revenue of $100.9 million, below the anticipated $102.58 million. Despite these misses, CompoSecure’s full-year net sales increased by 8% year-over-year, driven by strong domestic and international sales. The company’s digital security platform, Arculus, turned profitable in the fourth quarter, contributing $3.5 million to adjusted EBITDA. Needham analysts adjusted their outlook for CompoSecure, lowering the price target to $15.00 while maintaining a Buy rating, following the company’s earnings report. They also revised the 2025 adjusted EBITDA forecast to $145 million, down from the previous estimate of $157 million, aligning with the company’s guidance of mid-single-digit growth in revenue and adjusted EBITDA. The company has also completed the spin-off of Resolute Holdings, which is expected to impact management fees starting in the first quarter of 2025. Despite operational challenges, CompoSecure remains focused on organic growth, product innovation, and exploring merger and acquisition opportunities.
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