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Wednesday, JMP Securities analysts maintained their Market Outperform rating for SoundThinking (NASDAQ:SSTI) shares, with a steady price target of $19.00. The firm’s analysts highlighted the company’s potential for long-term growth, citing several key factors that underpin their positive outlook. Currently trading at $15.37, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $18 to $30.
Analysts at JMP emphasized SoundThinking’s attractive profitability profile, projecting a significant increase in adjusted EBITDA from $14.3 million in fiscal year 2023 to an estimated $29.7 million by fiscal year 2026. The company maintains a healthy gross margin of 57.32% and has achieved 10.05% revenue growth over the last twelve months. This expected growth in profitability is one of the primary reasons for their continued endorsement of the stock. For deeper insights into SoundThinking’s financial health, which InvestingPro rates as GOOD, subscribers can access the comprehensive Pro Research Report.
Additionally, the analysts pointed out SoundThinking’s leading position in the gunshot detection market, which they consider to be relatively uncontested. This market leadership is further supported by recent studies and reports that validate the effectiveness of the company’s technology in addressing gun violence.
The University of Chicago study and the Oakland Police Department have both reported on the efficacy of SoundThinking’s technology solutions. These reports serve as evidence of the company’s proven capabilities in combating the persistent issue of gun violence, adding to the analysts’ confidence in the company.
Furthermore, JMP Securities analysts noted the potential for crime prevention and police patrolling to benefit from data-driven insights. SoundThinking’s ability to innovate in this area is seen as a significant advantage.
Lastly, the firm’s analysts underscored SoundThinking’s efforts to diversify its revenue streams. The company is not only expanding beyond its core ShotSpotter product but is also extending its reach into international markets, which could lead to further growth opportunities.
Overall, the analysts’ reiteration of the Market Outperform rating and $19.00 price target reflects their belief in SoundThinking’s strong market position and its prospects for continued success in the coming years. InvestingPro data reveals the company holds more cash than debt on its balance sheet, with additional ProTips available to subscribers seeking comprehensive analysis of SSTI’s investment potential.
In other recent news, SoundThinking Inc. reported its fourth-quarter earnings for 2024, which fell short of analyst expectations. The company posted revenue of $23.4 million, missing the anticipated $26.92 million, and an earnings per share (EPS) of -$0.32, significantly below the forecasted $0.0043. The shortfall was largely due to a $3.5 million impact from delayed contract renewals with the New York Police Department (NYPD). Despite this, SoundThinking has raised its financial outlook for 2025, projecting a 10% year-over-year revenue growth. This positive outlook comes as the company secured an extension of its NYPD ShotSpotter contract and anticipates further contract renewals.
Additionally, Craig-Hallum analyst Jeremy Hamblin increased the price target for SoundThinking to $27, maintaining a Buy rating, while Cantor Fitzgerald also maintained an Overweight rating with a $20 target. SoundThinking’s expansion into international markets continues, with a new contract to implement its ShotSpotter system in Niterói, Brazil, valued at approximately $1.7 million. This agreement marks the company’s return to Brazil and extends its presence in South America. SoundThinking’s management remains confident in overcoming recent setbacks and achieving its financial targets for the coming year.
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