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On Thursday, Stifel analysts adjusted the price target for Inseego Corp. (NASDAQ:INSG) stock to $11.00, down from the previous $12.00, while maintaining a Hold rating. According to InvestingPro data, the stock has experienced significant volatility, with a 256% return over the past year despite a recent 10% decline in the past week. The company currently trades at an EV/EBITDA multiple of 134x, suggesting rich valuation levels. The revision follows Inseego’s fourth quarter results which surpassed expectations, with a sales increase of 6.9% over Stifel’s estimated $45.0 million, largely due to strong performance in Mobile Solutions. Additionally, the company fortified its financial position by completing a $52.0 million divestiture of its Telematics business.
Inseego’s adjusted EBITDA for the quarter reached $5.4 million, exceeding Stifel’s estimate by $1.6 million. While the company maintains a gross profit margin of 37%, InvestingPro analysis reveals current short-term obligations exceed liquid assets, with a concerning current ratio of 0.45. Projections for the March quarter indicate a significant decrease in sales, with the midpoint estimate showing a 26% drop compared to Stifel’s prior estimate of approximately $42.8 million. This decline is attributed to a surplus inventory in Mobile Solutions at the end of the year and a product transition in Fixed Wireless Access (FWA), while Services revenue is expected to remain relatively unchanged quarter over quarter.
The company’s new CEO, Juho Sarvikas, has presented a strategy for achieving more consistent growth. This includes expanding the product lineup with a tiered portfolio, exploring up-market opportunities in Enterprise and Industrial sectors, and enhancing software offerings. Despite these strategic initiatives and the improved balance sheet, Stifel has chosen to maintain its Hold rating on Inseego stock. The firm is awaiting further evidence of the sustainability of the company’s business before altering its stance.
The adjustment in the 12-month price target to $11.00 is based on 1.0x the enterprise value to the projected calendar year 2026 sales. Inseego’s management continues to focus on executing its long-term vision under the guidance of CEO Sarvikas, aiming to deliver more consistent growth and shareholder value. InvestingPro analysis indicates analysts expect the company to turn profitable this year, with an EPS forecast of $0.03 for FY2024. Subscribers can access 8 additional ProTips and comprehensive valuation metrics in the full Pro Research Report, offering deeper insights into Inseego’s financial health and growth potential.
In other recent news, Inseego Corp reported a robust financial performance for Q4 2024, with a significant 33% increase in revenue year-over-year, totaling $48.1 million. For the full year, the company achieved a 40% revenue growth, reaching $191.2 million. This growth was supported by strategic decisions, including the sale of its telematics business and a focus on expanding its Fixed Wireless Access (FWA) portfolio. Inseego also made substantial progress in reducing its debt from $165 million to $56 million by year-end.
Despite the positive financial results, the company’s stock experienced a decline in aftermarket trading. Analyst firms such as Roth Capital and TD Cowen have shown interest in the company’s future prospects, with discussions around growth opportunities and market expansion. Inseego has provided guidance for Q1 2025, anticipating revenue between $30 million and $33 million and adjusted EBITDA of $2 million to $3 million. The company plans to focus on expanding its presence in enterprise and industrial market segments with new product launches expected in mid-2025.
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