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On Friday, Craig-Hallum analyst Greg Palm adjusted the price target for Nlight (NASDAQ:LASR), a laser component manufacturer, reducing it to $11.00 from the previous $12.00 while maintaining a Hold rating on the stock. The company’s shares, currently trading at $9.32, have declined nearly 30% over the past year. According to InvestingPro data, the stock is currently trading near its 52-week low of $9.04, with analysts setting price targets ranging from $12 to $20. Palm’s decision comes amid contrasting performance across the company’s segments. He noted that if Nlight’s operations were exclusively focused on the Aerospace and Defense (A&D) sector, he would recommend a Buy rating due to the segment’s robust year-over-year revenue growth of 20% in FY24. The company’s FY25 guidance also anticipates a minimum revenue growth of 25% in this segment.
The analyst highlighted the A&D segment’s strong backlog, which has grown by 55% year-over-year, alongside increases in the unfunded value of contracts and numerous pipeline opportunities. This surge in visibility is a positive indicator for the segment’s future. However, Nlight’s continued reliance on commercial end markets, which account for approximately one-third of its revenue, presents a challenge. These markets have been consistently declining over the last two years.
Palm suggests that a turnaround in the commercial sector could serve as a significant catalyst for the company, but for now, the stock is considered a "show me" story, indicating that investors may need to see more concrete signs of improvement before becoming more bullish. Despite the current challenges, Palm believes Nlight remains an attractive option for long-term investors seeking exposure to the growth trends within the A&D sector. He concluded by stating that the accelerated growth from A&D might be sufficient to attract certain investors, even as he awaits a potential recovery in the commercial markets.
In other recent news, nLIGHT Inc . reported its Q4 2024 earnings, which significantly missed analyst expectations. The company recorded an earnings per share (EPS) of -$0.30 against a forecasted -$0.06, and revenue of $47.38 million fell short of the projected $59.97 million. This performance marks a 9% decrease in revenue compared to the previous year. Despite this, the Aerospace and Defense segment saw a 20% increase in revenue, highlighting a strong area amidst overall challenges. Cantor Fitzgerald adjusted its price target for nLIGHT to $14.00 from $15.00, maintaining an Overweight rating on the stock. The company concluded the quarter with $101 million in cash and no debt, reflecting a stable financial position. nLIGHT’s management remains optimistic about the Aerospace and Defense sector, forecasting a 25% growth for 2025. However, they anticipate continued headwinds in the commercial markets.
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