Procore signs multi-year strategic collaboration agreement with AWS
On Wednesday, Benchmark analyst Matt Harrigan confirmed a steadfast Buy rating for Ooma (NYSE:OOMA), with a consistent price target of $20.00. This target represents nearly 50% upside from the current price of $13.48. Harrigan’s endorsement comes as Ooma prepares to disclose its first-quarter fiscal year 2026 earnings after the market closes today. InvestingPro data reveals that 5 analysts have recently revised their earnings expectations upward, suggesting growing confidence in the company’s prospects. The analyst highlighted the company’s strong product offerings, particularly the AirDial POTS (Plain Old Telephone Service) replacement product, which is expected to sustain its momentum.
Harrigan emphasized that the AirDial product addresses a substantial market need, with over 20 million North American POTS lines in urgent need of an upgrade to avert rising costs, potential safety risks, and business interruptions. He anticipates that Ooma will continue to see margin improvements due to operational leverage, including decreased research and development expenses. The company already maintains a healthy gross profit margin of 60.74% and has achieved 8.5% revenue growth over the last twelve months.
Benchmark’s projection for Ooma’s Adjusted EBITDA margin in fiscal year 2030 is conservatively set just above 18%, which is below the company management’s long-term target of 20-25%. The $20 price target set by Benchmark is based on valuation metrics related to the mid-cap S&P 400 index, rather than the larger S&P 500, and corresponds to a modest 2.0x enterprise value-to-sales target multiple. This valuation is derived from a discounted cash flow (DCF) methodology.
Harrigan also suggested that there is potential for further stock price appreciation. He believes this could be realized by incorporating the ongoing momentum of AirDial and the possibility of achieving higher Adjusted EBITDA margins than currently forecasted. The company’s strong performance is reflected in its impressive 70.63% return over the past year, while maintaining a moderate debt level with a debt-to-capital ratio of just 0.04. As Ooma enters its earnings announcement, investors will be watching to see if the company’s performance aligns with Benchmark’s positive outlook.
In other recent news, Ooma Inc . reported a strong financial performance for the fourth quarter of fiscal year 2025, surpassing analyst expectations with an earnings per share (EPS) of $0.21, compared to the forecasted $0.14. The company also reported a revenue of $65.1 million, slightly above the anticipated $63.98 million, marking a 6% year-over-year increase. Ooma’s strategic focus on cloud communications and POTS replacement solutions continues to drive growth, with the company generating $20.2 million in free cash flow for the year. Analyst Matt Harrigan from Benchmark raised the price target for Ooma stock to $20.00 from $17.00, maintaining a Buy rating, following the earnings release. Harrigan highlighted the AirDial POTS replacement product as a key growth driver, addressing a substantial market need. Meanwhile, Citizens JMP maintained its Market Perform rating for Ooma, with analyst Erik Suppiger noting the company’s consistent revenue performance and modest valuation at 1.3 times revenue. Suppiger also commended Ooma’s leadership, expressing confidence in the company’s management despite the Market Perform rating. These developments reflect Ooma’s strategic initiatives and market positioning, as the company continues to expand its product offerings and explore new market opportunities.
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