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Tuesday, Stephens analysts adjusted their outlook on Parametric Sound (NASDAQ:PAMT), increasing the price target to $12.50 from the previous $11.00 while maintaining an Equal-Weight rating on the company’s stock. The stock, currently trading at $13.64, has declined 16.73% year-to-date. InvestingPro analysis reveals several key challenges facing the company, with 8 additional warning signals available to subscribers. The revision follows Parametric Sound’s first-quarter earnings report for 2025, where the company posted an adjusted earnings per share (EPS) that fell short of expectations, with a negative EPS of $1.85 over the last twelve months. Analysts at Stephens attributed the earnings miss to ongoing difficulties within the broader transportation and logistics (TL) sector, particularly in the automotive market. The company’s revenue has declined by 10.92% during this period.
Parametric Sound’s performance has been notably affected by decreased auto volumes, which have led to operational ratio (OR) deleverage and reduced fleet productivity. The start of the second quarter has shown a continuation of these challenges, with domestic original equipment manufacturers (OEMs) reducing operations and some plant downtimes expected to extend into the summer months.
Despite these headwinds, Stephens analysts noted that Parametric Sound has managed to negotiate contract rate increases with shippers. However, these increases are insufficient to completely compensate for the impact of lower volumes. Consequently, Stephens has revised its earnings estimates downward for both 2025 and 2026, citing a lack of clear indicators for significant improvements in the market.
In light of these adjustments, the firm anticipates that if Parametric Sound successfully implements its cost-reduction strategies, there could be a modest return to profitability in the second half of 2025. The analysts reaffirmed their Equal-Weight rating, indicating a neutral stance on the stock’s potential performance, while expressing a cautious outlook on the company’s near-term prospects. The new price target of $12.50 reflects these considerations. According to InvestingPro Fair Value analysis, the stock appears slightly overvalued at current levels, with additional financial health metrics and exclusive insights available to subscribers.
In other recent news, PAMT Corp has revised its tender offer for share repurchases, raising the minimum purchase price to $14.50 per share, up from the previously stated $14.00. The tender offer aims to repurchase up to 435,000 shares, with the maximum price remaining at $17.00 per share. This modified Dutch auction tender offer is set to expire on May 1, 2025, unless extended or withdrawn. In related developments, Stephens analysts have adjusted their outlook on Parametric Sound, lowering the price target to $16.50 from $19.00, while maintaining an Equal Weight rating. This revision follows Parametric Sound’s fourth-quarter 2024 earnings, which did not meet analysts’ expectations due to challenges in the TL market and increased operational ratio deleverage. Analysts at Stephens foresee these difficulties continuing into early 2025, with a slower recovery in productivity and cost leverage than previously expected. However, the company has managed to outperform peers in managing insurance costs, which, along with potential improvements in over-the-road rates, may help mitigate some revenue pressures. Despite these efforts, Stephens remains cautious, maintaining an Equal Weight stance on Parametric Sound.
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