H.C. Wainwright maintains buy on SoundHound AI, target at $26

On Monday, H.C. Wainwright analyst Scott Buck reaffirmed a Buy rating on SoundHound AI Inc. (NASDAQ: NASDAQ:SOUN) shares, with a steady price target of $26.00, representing the highest among analyst targets ranging from $8.00 to $26.00. The endorsement follows SoundHound AI’s shares rising by 17.5% on Friday, outperforming the Russell 2000 Index, which saw an increase of 1.1%. According to InvestingPro data, the stock has demonstrated remarkable momentum with a 14.74% gain over the past week and an impressive 137.28% surge over the last six months. The surge in stock price was attributed to the company’s fourth-quarter results for 2024, which exceeded expectations in terms of revenue and adjusted EBITDA.

SoundHound AI reported significant sales momentum across various industries, including restaurants, automotive, healthcare, financial services, government, and energy. This diverse growth has given the management enough confidence to revise its 2025 revenue guidance upwards, now expecting between $157.0 million and $177.0 million, a slight increase from the previous forecast of $155.0 million to $175.0 million.

The upward revision in the revenue outlook, although modest, is considered a positive sign by H.C. Wainwright, particularly as it comes early in the year. There is an anticipation that the revenue range may tighten towards the higher end as 2025 progresses. The second half of 2025 is expected to be stronger due to seasonal factors and the company’s efforts in cross-selling and upselling, with the fourth quarter potentially showcasing over 50% year-over-year organic growth.

Buck noted that such performance could counter the skepticism among investors regarding SoundHound AI’s ability to achieve organic growth. The company’s financial position appears robust, with $198.2 million in available cash and no debt, which provides the flexibility to pursue organic growth initiatives or consider mergers and acquisitions. InvestingPro analysis confirms this strength, showing a healthy current ratio of 3.77 and strong revenue growth of 84.62% in the last twelve months. Get access to 12+ additional exclusive ProTips and comprehensive financial metrics with an InvestingPro subscription.

The analyst concluded that as SoundHound AI continues to execute its strategy and meet its guidance, the stock is likely to return to its year-end 2024 levels. The maintained price target of $26 reflects this optimistic outlook for the company’s shares. For a deeper understanding of SOUN’s valuation and growth prospects, access the detailed Pro Research Report available exclusively on InvestingPro, offering comprehensive analysis of the company’s financial health, market position, and future potential.

In other recent news, SoundHound AI Inc. reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of -$0.05, compared to the forecasted -$0.09. The company also exceeded revenue forecasts, posting $34.5 million against the anticipated $33.74 million, marking a 101% year-over-year growth. For the full year, SoundHound AI reported revenue of $85 million, reflecting an 85% growth. The company has no outstanding debt and ended the year with $198 million in cash and equivalents.

SoundHound’s strategic acquisition of Amelia has been a significant move, expanding its total addressable market and contributing to its business diversification. DA Davidson recently raised its price target for SoundHound AI to $13.00 from $9.50, maintaining a Buy rating, citing the company’s strong market expansion and revenue growth. The company has also provided a 2025 revenue outlook of $157-$177 million, with expectations of achieving adjusted EBITDA profitability by the end of the year. These developments highlight SoundHound AI’s continued focus on innovation and market penetration across various industries.

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