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On Tuesday, Piper Sandler displayed confidence in Weave Communications Inc (NYSE: WEAV), increasing the stock’s price target from $14.00 to $15.00 while maintaining an Overweight rating. Analysts at Piper Sandler cited the company’s strong performance in the first quarter, which saw an 18% year-over-year growth, surpassing the 16% growth estimate. The company’s impressive 71.4% gross margin and continued revenue growth of 19.85% over the last twelve months demonstrate its operational strength. This performance was bolstered by the successful acquisition of TrueLark for $35 million, a move that is expected to fast-track Weave Communications’ AI roadmap. InvestingPro analysis reveals 7 additional key insights about WEAV’s performance and outlook.
The analysts were particularly impressed by the company’s ability to exceed expectations without compromising its commitment to achieving positive free cash flow (FCF) and positive EBITDA for the full year. While currently not profitable, InvestingPro data shows analysts expect profitability this year, with an EPS forecast of $0.04 for FY2025. In light of these developments, Piper Sandler has adjusted its 2025 revenue estimate for Weave Communications upward by $6 million to $238 million. This revision includes a $2.5 million contribution from TrueLark, a $1.3 million revenue beat in Q1, and a $2.2 million increase for the full year.
Weave Communications’ recent stock performance showed a 38% drop over the past three months, a contrast to the S&P’s 7% decline during the same period. Analysts at Piper Sandler believe this sell-off is excessive, especially considering Weave Communications’ strong U.S.-centric business model and its robust customer base in the resilient healthcare services sector, which includes dental, medical, and veterinary services.
The revised price target of $15 reflects not only the higher revenue estimates but also the perceived undervaluation of Weave Communications shares. At 4x enterprise value to gross profit (EV/GP) on the calendar year 2026 estimates, the stock appears undervalued compared to the median of 11x for its specialty peers. This aligns with InvestingPro’s Fair Value assessment, which indicates the stock is currently undervalued. With a market capitalization of $801 million and analyst targets ranging from $11 to $17, Piper Sandler’s analysts maintain their Overweight rating, suggesting a favorable risk-reward balance for investors in Weave Communications stock. For deeper insights into WEAV’s valuation and growth potential, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Weave Communications Inc. reported a significant revenue increase of 18.3% year-over-year for the first quarter of fiscal year 2025, reaching $55.8 million, slightly surpassing the forecasted $54.74 million. The company’s earnings per share met expectations at $0.01, and they have raised their full-year revenue guidance to between $236.8 million and $239.8 million. Weave Communications announced the strategic acquisition of TrueLark, a company specializing in AI-powered workflow automation tools, for $35 million. This acquisition is expected to enhance Weave’s AI capabilities and expand its market potential, with the deal anticipated to close by the second quarter of fiscal year 2025.
Loop Capital adjusted its price target for Weave Communications to $16 from $18, maintaining a Buy rating, citing the recent contraction of multiples within the software sector. Meanwhile, Goldman Sachs increased its price target for Weave to $11 from $10, while keeping a Neutral rating, noting a 2% revenue increase following Weave’s first-quarter financial results. Analysts from both firms highlighted the strategic fit of the TrueLark acquisition within Weave’s growth plans. The acquisition is expected to expand Weave’s addressable market in the U.S. from $7.1 billion to $10 billion, offering greater cross-selling opportunities. Despite some projected declines in operating margin due to increased R&D and sales expenses related to TrueLark, Weave’s Payments segment continues to grow, doubling the rate of total revenue growth.
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