Procore signs multi-year strategic collaboration agreement with AWS
On Tuesday, Benchmark analysts maintained their Buy rating and $17.00 price target for Ooma Inc (NYSE:OOMA), expressing confidence ahead of the company’s earnings report. Currently trading at $13.45, InvestingPro analysis suggests the stock is undervalued, with analysts setting targets as high as $18.50. The analysts believe that an upward revision to the price target could be warranted following the announcement, given Ooma’s potential for continued strategic and partnership momentum. InvestingPro data reveals that 6 analysts have recently revised their earnings estimates upward for the upcoming period.
The price target is based on valuation parameters more in line with the smaller cap S&P 400 index rather than the larger S&P 500, resulting in a modest 1.6x enterprise value/sales target multiple. This target is derived from a discounted cash flow (DCF) approach. Benchmark analysts suggest that further upside is possible, particularly with the addition of AirDial momentum and the potential for increased Adjusted EBITDA margins.
Benchmark’s forecast for Ooma’s Adjusted EBITDA in fiscal year 2026 is $24.9 million, which would represent a margin of approximately 9%, at the lower end of the company’s intermediate model of 10-12% margins. This estimate is conservative compared to management’s long-term margin goal of 20-25%. The analysts anticipate that Ooma will place a lower emphasis on research and development spending and focus more on sales and marketing efforts.
Investors are expected to be attentive to the fiscal year 2026 guidance that Ooma is set to issue in the earnings report. Benchmark analysts suggest that the guidance could exceed investor expectations, contributing to the company’s positive outlook.
In other recent news, Ooma Inc. reported strong financial results for the third quarter of 2024, with earnings per share (EPS) of $0.17, surpassing the forecast of $0.16. The company’s revenue reached $65.1 million, exceeding estimates of $64.28 million, marking a 9% increase year-over-year. Business subscription revenue grew by 13% year-over-year, and Ooma achieved a debt-free status after paying off all its debt. Lake Street Capital Markets responded to Ooma’s solid performance by raising its price target from $14.00 to $18.00 while maintaining a Buy rating, indicating confidence in the company’s business strategies. The analysts have expressed satisfaction with Ooma’s operational execution in recent quarters, leading to an upward revision of their fiscal year 2025 projections. Ooma has also projected Q4 revenue to be between $64.6 million and $65.1 million, with full-year revenue expected to range from $256.3 million to $256.8 million. This guidance reflects the company’s focus on maintaining profitability and operational efficiency. Ooma’s strategic initiatives and recent partnerships, including significant wins with large partners, are expected to support its growth trajectory.
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