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Tuesday, Stephens, a financial services firm, raised the price target on shares of PAR Technology (NYSE:PAR) to $90 from $83, while maintaining an Overweight rating. The adjustment follows PAR's recent Investor Day, which reinforced Stephens' positive stance on the company's stock.
The analyst at Stephens highlighted PAR Technology's strong competitive positioning in the unified commerce solution space and potential for cross-selling within the domestic restaurant industry.
Moreover, opportunities in the convenience store sector and international markets are expected to contribute to more than 20% annual recurring revenue (ARR) growth over the medium term. The firm's scalable business model is anticipated to enhance margins, with incremental margins projected to be between 40% and 50%.
Although PAR's Investor Day did not reveal any long-term financial goals or new business developments, the analyst expressed confidence in the company's robust pipeline of enterprise deals. The ongoing rollout with Burger King is also reportedly progressing well.
Despite the stock's year-to-date advance of approximately 80%, which has led to the multiple expanding to around 10 times ARR, Stephens believes that PAR Technology holds scarcity value as a small-cap category leader.
The firm also noted PAR's relative valuation compared to peers like Toast (NYSE:TOST) Inc. (trading at 15 times 2025 gross profit) and Agilysys (NASDAQ:AGYS) (trading at 18 times ARR and 18 times gross profit).
The Overweight rating reflects Stephens' expectation that PAR Technology will continue to perform well in the market, supported by its strategic initiatives and growth opportunities. The raised price target to $90 from $83 is indicative of the firm's confidence in PAR's future financial performance and market position.
In other recent news, PAR Technology has demonstrated continued growth, with Benchmark increasing its stock price target from $69.00 to $92.00. The company recently reported its third quarter 2024 results, highlighting an adjusted EBITDA profitability for the first time in six years under CEO Savneet Singh's leadership. This achievement validates the company's business model and suggests potential for further growth.
PAR Technology's third quarter 2024 earnings report showed total revenue rising to $96.8 million, a 41% increase, with a significant 91% year-over-year leap in subscription services revenue to $59.9 million. Despite a net loss from continuing operations of $20.7 million, the company's annual recurring revenue (ARR) enjoyed a 93% increase to $248.1 million, primarily due to substantial growth in its Engagement Cloud and Operator Cloud segments.
The company also reported a positive adjusted EBITDA of $2.4 million, a marked improvement from the loss reported in the same quarter the previous year. The recent acquisition of TASK Group and the introduction of new products such as the Punchh wallet and QR code pay-at-the-table capabilities are anticipated to further enhance growth.
According to PAR Technology's management, the company is optimistic about demand and market opportunities, particularly in international expansion and the convenience store segment. These expectations, as stated by the company, are based on current market conditions and could change in the future.
InvestingPro Insights
PAR Technology's recent performance aligns with Stephens' optimistic outlook. InvestingPro data shows the company's revenue growth at 49.11% over the last twelve months, with a 40.83% increase in the most recent quarter. This robust growth supports the analyst's projection of over 20% annual recurring revenue growth.
The stock's strong momentum is evident in its recent price movements. InvestingPro data reveals a 32.79% return over the past month and a substantial 105.11% return over the last year. These figures underscore Stephens' observation of PAR's significant year-to-date advance.
However, investors should note that PAR is currently trading near its 52-week high, with its price at 99.18% of the peak. This aligns with an InvestingPro Tip suggesting that the stock's RSI indicates overbought territory. Another relevant InvestingPro Tip highlights that PAR is trading at a high revenue valuation multiple, which corresponds with Stephens' mention of the expanded multiple.
For a more comprehensive analysis, InvestingPro offers 13 additional tips for PAR Technology, providing investors with a deeper understanding of the company's financial health and market position.
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