Napco stock target cut to $21 at Craig-Hallum

On Monday, Craig-Hallum adjusted its outlook on Napco Security Technologies, Inc. (NASDAQ: NASDAQ:NSSC), reducing the firm’s price target from $28.00 to $21.00 while maintaining a Hold rating on the stock. The adjustment comes as the stock has declined nearly 47% over the past six months, currently trading near its 52-week low of $19.62. According to InvestingPro analysis, the stock’s RSI indicates oversold conditions, suggesting potential value at current levels. The revision comes as small business confidence declines amidst an uncertain macroeconomic environment, prompting the firm to revise its estimates for Napco’s equipment sales, which are expected to face near-term challenges.

The decision follows recent remarks from large distribution partners highlighting a slowdown in the intrusion and fire alarm verticals. However, the locking segment has shown relative resilience. Insights from the ISC West trade show indicated a sense of optimism about future products and a potential rebound in residential markets, but dealers are reportedly adopting a cautious stance with regard to placing new orders. Despite market challenges, InvestingPro data shows NSSC maintains strong financial health with a current ratio of 7.55 and more cash than debt on its balance sheet.

Craig-Hallum’s analysis also factors in the potential implications of a new universal tariff policy announced by the Trump Administration, which was unexpected by many just two weeks prior to the update. This policy could present a cost headwind for Napco despite the company’s manufacturing operations being based in a country where the U.S. has a significant trade surplus.

While approximately 50% of Napco’s revenue is recurring, which could mitigate some of the earnings volatility, there is speculation about whether the company may need to consider reducing its workforce if the downward trends persist. The research firm reiterated its Hold rating as it adjusted the price target to reflect these concerns. Despite current headwinds, NSSC maintains a healthy gross profit margin of 56.4% and strong return on equity of 29%. For deeper insights into NSSC’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

In other recent news, Napco Security Technologies, Inc. has experienced several adjustments to its price targets by various analyst firms. DA Davidson, after reviewing Napco’s second-quarter fiscal year 2025 financial results, maintained a Buy rating but adjusted the price target to $28 from $32. The adjustment was made due to ongoing irregular buying patterns from key distribution partners and project timing affecting recent financial results. Similarly, Lake Street Capital Markets also revised its price target to $28, citing a challenging economic environment and temporary challenges faced by two major distributors. Despite these challenges, Lake Street remains optimistic about Napco’s long-term growth prospects, highlighting its strong financial position with $99 million in cash reserves and no debt.

Needham also adjusted its price target for Napco, reducing it from $40 to $37, while maintaining a Buy rating. The firm noted that Napco’s manufacturing base in the Dominican Republic provides an advantage over competitors facing tariff headwinds. DA Davidson had previously set a price target of $48, which was maintained post-earnings, despite Napco’s quarterly sales and earnings per share falling short of expectations. The firm’s recurring monthly revenue grew by 14% year over year, slightly below the anticipated 17% increase. Despite these mixed results, analysts continue to express confidence in Napco’s potential for earnings leverage and market share gains.

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