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On Monday, BMO Capital Markets adjusted its outlook on N-Able Inc. (NYSE:NABL) shares, reducing the price target from $13.50 to $8.50 while sustaining a Market Perform rating. According to InvestingPro data, N-Able currently trades at a P/E ratio of 56.2, with impressive gross profit margins of 84.03%. The decision follows N-Able’s latest financial report, which BMO analyst Keith Bachman found to have a less robust future revenue and adjusted EBITDA margin forecast than anticipated, even after accounting for the acquisition of Adlumin.
Bachman noted that although the December quarter results were reasonable, with revenue growth of 11.93% over the last twelve months, he perceives the company’s organic growth projections for the upcoming year as underwhelming. This sentiment is partly attributed to the challenges arising from N-Able’s ongoing annual contract initiative. Despite these concerns, the analyst acknowledges the potential benefits of the Adlumin acquisition and N-Able’s broader opportunities within the security market. InvestingPro analysis indicates the company maintains strong financial health with a current ratio of 3.01, suggesting robust liquidity management.
Bachman’s commentary underscores a cautious optimism about N-Able’s strategic moves in the security sector, particularly with the integration of Adlumin. However, he emphasizes the need for the company to demonstrate more consistent revenue generation and execution before a more positive stance on the stock could be justified.
Reiterating the Market Perform rating, BMO’s revised price target of $8.50 reflects the firm’s recalibrated expectations for N-Able’s financial performance. The new target takes into account the company’s near-term growth prospects and the anticipated impact of the annual contract initiative on its business operations.
Investors and market observers will be watching closely to see if N-Able can overcome the hurdles identified by BMO and achieve the revenue durability and execution consistency that could potentially lead to a more favorable assessment of its stock in the future. For deeper insights into N-Able’s financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 10+ additional ProTips and detailed valuation metrics in the Pro Research Report.
In other recent news, N-able, Inc. reported its fourth-quarter 2024 earnings, which exceeded Wall Street expectations with an earnings per share (EPS) of $0.10, surpassing the forecast of $0.08. The company also reported a revenue of $116.5 million for the quarter, slightly above the consensus estimate of $113.71 million, marking a 7% year-over-year growth. Despite these positive results, N-able’s revenue guidance for the first quarter and full-year 2025 fell short of analyst expectations, projecting revenue between $115 million and $116 million for Q1 and $486.5 million to $492.5 million for the full year. This guidance was below the anticipated figures of $120.4 million for Q1 and $512.2 million for the full year, leading to a significant drop in stock value.
The company also highlighted its strategic acquisition of Adlumin, aimed at enhancing its security and IT management platform, which contributed approximately $2.5 million in Q4 revenue. Analysts from Needham and JPMorgan have shown interest in the integration and impact of Adlumin on N-able’s future growth. The company expects its Annual Recurring Revenue (ARR) to grow by 7% to 9% year-over-year, with an adjusted EBITDA margin of 27% to 28% for 2025. As N-able navigates these developments, investors are keenly observing its ability to meet growth and profitability targets in the evolving IT services market.
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