Raymond James reiterates Strong Buy rating on Alarm.com stock

Published 08/08/2025, 11:46
Raymond James reiterates Strong Buy rating on Alarm.com stock

Investing.com - Raymond (NSE:RYMD) James maintained its Strong Buy rating and $80.00 price target on Alarm.com (NASDAQ:ALRM) following the company’s second-quarter 2025 results. According to InvestingPro data, the company’s shares are currently trading at $54.34, with analysis suggesting the stock is undervalued relative to its Fair Value.

The security and smart home solutions provider reported approximately 9% year-over-year total revenue growth in Q2, accelerating from 7% growth in the first quarter. This performance was driven by continued SaaS revenue upside and further acceleration in hardware revenue. The company maintains strong financial health with a GOOD rating from InvestingPro, supported by a healthy current ratio of 2.14.

Raymond James highlighted that Alarm.com’s business is becoming increasingly diversified, with new growth areas now representing more than 25% of the company’s mix and growing at premium software rates of 25%. EnergyHub has been a strong contributor to this growth segment.

The firm noted that Alarm.com currently trades at approximately 3x EV/revenue on a total company basis, comparable to single-digit growth software companies, despite delivering 9% year-over-year growth in the first half of 2025.

With over $1 billion in gross cash, Raymond James sees multiple potential value creation opportunities for Alarm.com through continued share repurchases and strategic acquisitions that could accelerate growth and further diversify the business.

In other recent news, Alarm.com Holdings Inc. reported its second-quarter 2025 earnings, surpassing analyst expectations. The company achieved an earnings per share (EPS) of $0.60, exceeding the projected $0.51. Additionally, Alarm.com’s revenue reached $254.3 million, outperforming the anticipated $244.17 million. Despite the strong financial results, the stock experienced a decline in after-hours trading. These developments highlight the company’s financial performance in the recent quarter. The earnings and revenue results are crucial for investors evaluating the company’s financial health. Such performance often influences investor sentiment and market reactions.

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