Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Wednesday, Craig-Hallum analyst Jeremy Hamblin increased the price target on SoundThinking (NASDAQ:SSTI) stock to $27.00 from $25.00 while keeping a Buy rating on the shares. According to InvestingPro data, the stock currently trades at $14.25, with analyst targets ranging from $18 to $30. Despite a challenging week that saw shares decline by 9.5%, the company maintains a "GOOD" Financial Health score. The adjustment follows SoundThinking’s fourth-quarter results, which missed expectations due to previously disclosed delays in renewing contracts with New York City. Despite these setbacks, SoundThinking has recently secured an extension of its NYPD ShotSpotter contract and anticipates an extension of its LEEDs deal with the city within the next two months. The company has demonstrated strong revenue growth of 19.4% over the last twelve months, though InvestingPro analysis indicates the stock is currently trading below its Fair Value.
In light of these developments, SoundThinking has updated its FY25 revenue and EBITDA forecasts upwards, even after considering the impact of the delayed contract timings. Moreover, the potential for SoundThinking to regain a significant contract in Chicago has become more likely as the city has issued a Request for Proposals (RFP) for acoustic gunshot detection technology. Although Brandon Johnson remains the mayor of Chicago, the RFP suggests the city’s interest in reinstating the service, positioning SoundThinking as a frontrunner for this opportunity.
A successful bid in Chicago would not only represent a substantial financial gain for SoundThinking but is also expected to greatly enhance investor sentiment and lead to a notable increase in the company’s stock valuation multiple. The analyst emphasized the importance of this potential deal, stating that a return of Chicago would be a "material financial win" and would likely result in a "significant boost to sentiment in the stock and dramatic improvement in the valuation multiple."
Hamblin pointed out that the base business of SoundThinking continues to show steady progress and suggested that the stock has the potential to double based on the current visibility. The analyst concluded by reaffirming the Buy rating and raising the price target to $27, signaling confidence in the company’s growth prospects and market position. For deeper insights into SoundThinking’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 10 additional ProTips and detailed financial metrics in the Pro Research Report.
In other recent news, SoundThinking Inc. reported its Q4 2024 earnings, which fell short of analyst expectations. The company posted an earnings per share (EPS) of -$0.32, significantly missing the forecasted $0.0043. Revenue for the quarter was $23.4 million, below the anticipated $26.92 million, largely due to a $3.5 million delay in NYPD contract renewals. Despite these quarterly challenges, SoundThinking’s full-year revenue grew by 10% to reach $102 million, indicating underlying business strength. The company has provided revenue guidance for 2025, expecting a 10% year-over-year growth, with a projection of $111 million to $113 million. Additionally, SoundThinking aims for an adjusted EBITDA margin of 21-23% in the coming year. The company continues to expand internationally and has launched several new products, including advancements in its SafePoint weapons detection system. Analyst firms have yet to provide specific upgrades or downgrades following these developments.
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