On Tuesday, H.C. Wainwright adjusted its outlook on shares of Mitek Systems (NASDAQ:MITK), raising the price target to $13.00 from the previous $11.00 while maintaining a Buy rating on the company's stock.
The revision followed Mitek Systems' disclosure of its F4Q24 operating results after the market closed on Monday. The company reported revenue of $43.2 million, surpassing the forecast of $41.2 million and achieving full-year revenue of $172.1 million, which is within the guided range of $169.0 million to $173.0 million.
During the earnings call, Mitek Systems outlined a strategic plan for operational improvements in FY25 and a return to profitable growth in FY26. The planned improvements include an increased use of automation within the Identity segment, which could lead to a reduction in transaction costs by up to 25%.
The company anticipates that these changes will help accelerate the timeline to profitability within the Identity segment, which is expected when revenue hits between $80.0 million and $85.0 million.
Despite the anticipated cost savings, Mitek Systems plans to reinvest much of these funds into new products, such as Check Fraud Defender. The combination of these investments and cost reductions is expected to set the stage for a return to profitable growth starting in FY26. Moreover, the company may benefit from significant revenue opportunities within the identity segment that were delayed from FY24.
While acknowledging the improved transparency in the earnings results and management's discussion during the conference call, H.C. Wainwright noted that visibility remains somewhat challenging.
Nonetheless, the firm suggests that if investors see evidence of execution over the coming quarters, it could lead to a positive response in the shares. The firm's updated price target reflects confidence in the company's strategic direction and potential for growth.
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