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On Monday, Deutsche Bank (ETR:DBKGn) analysts revised their stance on AutoStore Holdings Ltd (OL:AUTO:NO), downgrading the company’s stock rating from ’Buy’ to ’Hold’. The firm also adjusted the price target to NOK5.70, a significant decrease from the previous NOK11.40. The downgrade followed AutoStore’s first-quarter results, which fell short of expectations. The company faced challenges from U.S. tariffs and an uncertain macroeconomic environment, which impacted its financial performance.
AutoStore reported that $27.5 million worth of deals, from a total order intake of $141 million for the quarter, were transitioned to AutoStore-as-a-Service projects. These projects will generate revenue over 7 to 10 years, as opposed to the immediate recognition of revenue under the traditional sales model. While this shift is expected to increase recurring revenue and improve long-term visibility, it has intensified the immediate revenue shortfall.
The company’s revenues for the first quarter stood at £86 million, marking a 38% decline year-over-year. Even after adjusting for the AutoStore-as-a-Service deals, the adjusted revenue would have been $113 million, which still represents an 18% decrease from the previous year. The order intake of $141 million also showed a decline of 23% year-over-year and a 2% drop from the previous quarter.
The analyst from Deutsche Bank highlighted the impact of the shifted deals on AutoStore’s revenue recognition. The transition to the as-a-Service model, while beneficial for the company’s revenue consistency over time, has created a short-term revenue gap in the face of a weaker macroeconomic climate.
AutoStore’s quarterly financial results have led to a reevaluation of the company’s stock by Deutsche Bank, with the new ’Hold’ rating reflecting the bank’s revised outlook on the company’s near-term financial prospects. The lowered price target to NOK5.70 from NOK11.40 underscores the challenges AutoStore faces in the current economic landscape.
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