Stephens cuts Parametric Sound target to $16.50, keeps rating

Published 18/02/2025, 14:14
Stephens cuts Parametric Sound target to $16.50, keeps rating

Tuesday, Stephens analysts adjusted their outlook on Parametric Sound (NASDAQ:PAMT) shares, lowering the price target to $16.50 from the previous $19.00 while maintaining an Equal Weight rating on the stock. The company, currently trading at $14.12 with a market capitalization of $307.57 million, has seen its stock decline significantly over the past three months according to InvestingPro data. The revised target follows Parametric Sound’s reported earnings for the fourth quarter of 2024, which did not meet analysts’ expectations. With revenue of $714.65 million showing an 11.86% year-over-year decline and negative earnings, the company’s adjusted earnings per share (EPS) fell short, primarily due to persistent issues in the TL market and increased operational ratio (OR) deleverage resulting from diminished tractor productivity.

The automotive sector, a significant market for Parametric Sound, has faced its own challenges, with plant shutdowns happening more frequently and for longer durations than anticipated during the fourth quarter. Analysts foresee these difficulties extending into early 2025. Despite efforts by Parametric Sound to prioritize rate-taking and the transportation of profitable loads, the negative impact on volume and empty miles is likely to persist at least until the latter half of the year.

In light of these factors, Stephens has revised downward its earnings estimates for Parametric Sound for the years 2025 and 2026. The new projections take into account a slower than previously expected recovery in productivity and cost leverage. However, there are some positive aspects to consider. The company has managed to outperform its peers in managing insurance costs, which, along with expected improvements in over-the-road (OTR) rates, should help mitigate some of the revenue pressures.

The analyst’s commentary highlighted these dynamics, noting that while there are positive developments, such as the control of insurance costs and potential rate improvements, these are not sufficient to fully counterbalance the revenue challenges faced by the company. Despite current headwinds, InvestingPro analysis suggests the company is undervalued, with analysts expecting profitability this year. As a result, Stephens remains at an Equal Weight stance on Parametric Sound with the newly set price target of $16.50. InvestingPro subscribers have access to 8 additional key insights about PAMT’s financial health and future prospects.

In other recent news, PAMT Corp, previously known as P.A.M. Transportation Services, Inc., has updated its capital stock description following its redomestication. The company, now based in Nevada, initially announced the name change and redomestication from Delaware. This change was part of a plan of conversion adopted by PAMT’s board of directors and later approved by shareholders. The updated capital stock description details the structure and rights associated with PAMT’s capital stock, reflecting the company’s current legal domicile and corporate identity. PAMT Corp’s common stock, with a par value of $0.01 per share, remains on the NASDAQ Global Market. The company has made this information publicly available through an SEC filing to ensure transparency for its shareholders and the investing public. This corporate update is part of PAMT Corp’s ongoing commitment to comply with regulatory requirements and to keep its investors informed of significant corporate changes.

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