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On Tuesday, Goldman Sachs analyst Kash Rangan adjusted the price target for Weave Communications Inc (NYSE: WEAV), increasing it to $11.00 from the previous $10.00, while maintaining a Neutral rating on the stock. Currently trading at $10.70, Weave’s stock has shown significant volatility, with a 52-week range of $8.16 to $17.63. According to InvestingPro analysis, the stock’s current price aligns closely with its calculated Fair Value, suggesting balanced valuation.
Following Weave’s first-quarter financial results for fiscal year 2025, which exhibited a 2% revenue increase, Rangan decided to revise the price target upward. This revenue boost continues a trend of outperforming results that began in the first quarter of fiscal year 2023 and persisted through the fourth quarter of fiscal year 2024, with InvestingPro data showing impressive revenue growth of 19.85% over the last twelve months. The operating margin (OpM) remained consistent with expectations, though the company maintains a healthy gross profit margin of 71.4%.
Weave announced its plans to acquire TrueLark, a company specializing in AI-driven workflow automation tools for small and medium businesses (SMBs). The acquisition is anticipated to be completed by the second quarter of fiscal year 2025. Despite the stock showing no after-hours movement, investors are weighing the implications of increased revenue guidance for fiscal year 2025, which has risen by 2%. This increase is somewhat offset by a projected decline in operating margin by 130 basis points, a change attributed to TrueLark’s revenue impact and related increases in research and development (R&D) and sales and marketing (S&M) expenses.
Rangan highlighted several key takeaways from the quarter, including the net revenue retention (NRR) rate holding steady at 98% for the third consecutive quarter, a sales peak in Specialty Medical (TASE:BLWV), and the expansion of Weave’s serviceable market by approximately 60,000 locations due to new product integrations. Additionally, Weave’s Payments segment continues to grow, doubling the rate of total revenue growth.
While acknowledging the TrueLark acquisition as strategically beneficial, potentially increasing Weave’s addressable market in the U.S. from $7.1 billion to $10 billion and offering greater cross-selling opportunities, Rangan prefers to wait for more evidence of sustainable revenue acceleration before adopting a more positive outlook on the company’s stock. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes detailed analysis of Weave’s growth strategy, financial health (currently rated as FAIR), and future prospects among 1,400+ top US stocks.
In other recent news, Weave Communications Inc. reported a substantial 18.3% increase in revenue for the first quarter of 2025, reaching $55.8 million and surpassing the forecasted $54.74 million. The company’s earnings per share met expectations at $0.01. In addition to its earnings report, Weave announced the acquisition of TrueLark for $35 million, a move aimed at enhancing its AI capabilities and expanding market potential. The acquisition is expected to contribute positively to the company’s bottom line by 2026. Weave has also raised its full-year revenue guidance to a range of $236.8 million to $239.8 million. During the earnings call, analysts focused on the strategic fit of the TrueLark acquisition, with questions about its impact on Weave’s growth and resilience to economic challenges. The company continues to see strong demand in specialty medical sectors, with significant growth potential due to its current market penetration of less than 15%.
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