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Friday - Canaccord Genuity analysts have revised their price target for Alarum Technologies (NASDAQ:ALAR) shares, reducing it to $11.00 from the previous $25.00. Currently trading at $6.61, InvestingPro analysis suggests the stock is undervalued, with a P/E ratio of 10.2x and EV/EBITDA of 3.5x. Despite this significant adjustment, the firm maintains its Buy rating on the stock. Kingsley Crane, the analyst from Canaccord, cited a sharp downturn in growth trajectory, noting a substantial approximately 40 percentage point net revenue retention (NRR) compression over the past year.
Crane’s analysis pointed out that Alarum’s stock has fallen roughly 65% from its peak in October, with InvestingPro data showing a 70% decline over the past year. He reminded investors of the company’s robust unit economics, particularly within its NetNut division, which concluded the fiscal year 2024 with free cash flow (FCF) margins of 26%. The company maintains strong fundamentals with a healthy current ratio of 2.3 and revenue growth of 20%. Crane suggests that for investors who can tolerate some market fluctuations, the current FCF levels could provide a cushion while the company seeks to revive growth throughout fiscal year 2025.
The revised price target of $11 is based on a valuation of twice the expected calendar year 2026 sales and eleven times the projected FCF for the same period. The analyst emphasized the potential for Alarum’s growth to pick up again in the coming fiscal year, which supports the decision to reiterate the Buy rating despite the lowered price target.
Alarum Technologies has experienced a challenging period, reflected in both its stock performance and the revised expectations from analysts. However, the company’s solid FCF margins, particularly in its NetNut business, appear to offer some optimism for the future as it seeks to navigate through the current headwinds and return to a stronger growth trajectory. With projected revenue growth of 21% for FY2025 and 11 additional key insights available on InvestingPro, investors can access comprehensive analysis through the platform’s detailed Pro Research Report, helping make informed decisions during this transitional period.
In other recent news, Alarum Technologies reported a net profit of $400,000 for the fourth quarter of 2024, which is a notable decrease from the $1.7 million net profit in the same quarter of the previous year. Despite this quarterly decline, the company achieved a full-year net profit of $5.8 million, a significant turnaround from a net loss of $5.6 million in 2023. The company attributed this improvement to strategic cost reductions and a focus on AI data solutions. Alarum Technologies provided guidance for the first quarter of 2025, projecting revenue of $7.3 million and an expected Adjusted EBITDA between $800,000 and $1.2 million. The company is positioning itself to capitalize on long-term opportunities in the AI data extraction market. Additionally, Alarum’s shareholders’ equity doubled to $26.4 million, and cash and equivalents increased to $25 million. The company emphasized its strategic shift towards AI data enablement solutions during the earnings call. CEO Shahar Daniel highlighted the importance of data in the company’s strategy, stating that data is essential for success in the evolving market.
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