Craig-Hallum lifts Faro stock target to $45, retains buy rating

On Friday, Craig-Hallum analyst Greg Palm updated the price target for Faro Technologies (NASDAQ:FARO) shares, raising it to $45.00 from the previous $40.00, while maintaining a Buy rating on the stock. Palm’s assessment followed Faro Technologies’ first-quarter results, which surpassed expectations, signaling strong company performance amid challenging economic conditions. The stock has shown remarkable momentum, gaining 29% in the past week and trading near its 52-week high of $33.13. According to InvestingPro analysis, the stock appears fairly valued at current levels, with 12 additional exclusive insights available to subscribers.

Palm highlighted that Faro Technologies is well-equipped to handle the volatile macro environment, thanks to its effective management team and robust execution. He noted that the company’s specific growth drivers, including new product introductions and the expansion of partnerships and distribution channels, are expected to contribute to incremental revenue. With current revenue at $341.05M and a healthy current ratio of 2.31, InvestingPro data shows the company operates with a moderate level of debt and maintains strong liquidity.

The analyst also addressed concerns regarding tariffs affecting Faro’s manufacturing operations, describing these worries as exaggerated or entirely incorrect. Palm reassured investors by outlining a trajectory for Faro Technologies to achieve EBITDA of $100 million, which would mark a roughly 250% increase compared to the current EBITDA of $32.09M and set a new record for the company. Get deeper insights into Faro’s financial health and growth potential with InvestingPro’s comprehensive research report, part of their coverage of 1,400+ US stocks.

This anticipated growth in EBITDA, according to Palm, would lead to a significant rise in free cash flow (FCF) conversion. He expressed confidence that as the economic cycle recovers or improves, Faro Technologies’ earnings potential would sharply increase, which should, in turn, reflect positively on the company’s stock value.

In his closing remarks, Palm advocated for investors to take an early position in anticipation of the trend, implying that those who act ahead of the curve could benefit from the company’s future financial performance.

In other recent news, Faro Technologies reported first-quarter 2025 earnings that significantly exceeded analyst expectations, with an earnings per share (EPS) of $0.33 compared to the forecasted $0.0922. The company’s revenue reached $82.9 million, slightly surpassing the expected $80.75 million. Needham analysts responded by raising Faro’s stock price target to $38.00, maintaining a "Buy" rating due to the company’s strong earnings performance and improved gross margins. Faro’s management expressed cautious optimism for the second quarter, citing a growing backlog and the strength of new products and global partnerships. The company projects second-quarter revenue between $79 million and $87 million, with a non-GAAP EPS guidance range of $0.20 to $0.40. Despite a challenging market environment, Faro Technologies has launched seven major products in the past six months, enhancing its competitive position. Needham also revised its EPS estimates upward for both the second quarter and the full year, reflecting confidence in Faro’s ability to navigate economic challenges while delivering growth. Faro’s strategic initiatives, including new product launches and global partnerships, are expected to continue contributing positively to the company’s performance.

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