On Tuesday, Canaccord Genuity adjusted its price target on shares of Alarum Technologies (NASDAQ:ALAR), reducing it to $25.00 from the previous $28.00. Despite the price target reduction, the firm maintained its Buy rating on the company's stock.
The adjustment follows Alarum Technologies' plans to launch AI-powered data collection tools and its efforts to enhance NetNut's data with additional AI and analytics capabilities. According to Canaccord Genuity, these initiatives position Alarum to capitalize on the increasing value of data by expanding NetNut's data collection capabilities.
Canaccord Genuity acknowledges the variability inherent in Alarum's usage-based business model but expresses optimism about the company's ability to execute its strategic vision. In light of the revised business outlook and commentary from Alarum, Canaccord has slightly lowered its estimates.
The new price target of $25 is derived from a valuation of approximately 5 times the enterprise value to forecasted fiscal year 2025 sales (EV/FY25E sales) and 22 times the enterprise value to forecasted fiscal year 2025 free cash flow (EV/FY25E FCF). This valuation reflects Canaccord Genuity's confidence in Alarum Technologies' growth prospects and its strategic direction in the data collection and analytics space.
In other recent news, Alarum Technologies reported its Q2 results, demonstrating robust growth with a revenue of $8.9 million. The impressive performance was largely driven by the company's NetNut segment, which saw a 73% year-over-year increase in revenue, contributing to 98% of Alarum's total revenue. Despite these results, Canaccord Genuity revised its price target for Alarum, reducing it from $42 to $28, while maintaining a 'Buy' rating.
Alarum's unit economics also showed strength, with new customers in the second quarter generating 60% higher revenue in their first month than those in the first quarter. However, the company's first-ever quarterly guidance predicted a sequential decline in third-quarter revenue of about $2 million.
In terms of recent developments, Alarum has been enhancing its product offerings, launching its Website-Unblocker, and adding prominent global brands to its client list. Recognition came in the form of the '2024 Proxy Service Awards' and efforts are underway to expand its data product capabilities, including API and analytical tools.
Canaccord Genuity has revised its estimates to align with Alarum's updated outlook, with the new price target based on approximately 35 times the projected enterprise value to fiscal year 2025 free cash flow.
Alarum's Q1 2024 revenue soared by 139% to $8.1 million compared to the same period last year, and the company reported a net profit of $1.4 million, a significant improvement from the previous year's net loss. The company's cash reserves have also seen a positive trend, reaching $15.1 million.
InvestingPro Insights
Alarum Technologies' recent financial data and market performance offer additional context to Canaccord Genuity's analysis. According to InvestingPro, ALAR's revenue growth stands at an impressive 29.59% over the last twelve months as of Q3 2024, aligning with the firm's optimistic outlook on the company's growth prospects. This robust growth is complemented by a strong gross profit margin of 76.69%, which InvestingPro Tips highlight as "impressive gross profit margins."
The company's valuation metrics also provide interesting insights. With a P/E ratio of 12.08 and an adjusted P/E ratio of 9.89 for the last twelve months, ALAR appears to be trading at relatively modest multiples compared to its growth rate. This is further supported by an InvestingPro Tip suggesting that the "valuation implies a strong free cash flow yield," which could be attractive to value-oriented investors.
However, it's worth noting that ALAR's stock has experienced significant volatility. An InvestingPro Tip points out that the "stock has taken a big hit over the last six months," with data showing a -60.23% price return over that period. This volatility aligns with Canaccord Genuity's acknowledgment of the variability in Alarum's usage-based business model.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for ALAR, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.