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On Friday, Stifel analysts reiterated a Buy rating on Asure Software (NASDAQ:ASUR) with a steady price target of $11.00. The company’s fourth quarter revenues and adjusted EBITDA were reported to have fallen slightly short of the midpoint of their guidance. With a current market capitalization of $265 million and trading at $10.06, InvestingPro analysis suggests the stock is currently undervalued. Despite these results, Asure Software confirmed its EBITDA margin guidance for FY25 at 23%-24%. However, the company anticipates that first-half margins will be significantly lower than the annual guidance.
Asure’s management emphasized the company’s ex-ERTC (Employee Retention Tax Credit) revenue growth, which increased 22% year-over-year. This growth is particularly notable as Asure has now surpassed the challenging comparison period and is poised to continue its mid-teens growth rate in recurring revenue through to 2025. The company maintains impressive gross profit margins of 68.55% and generated $115.26 million in revenue over the last twelve months. In FY24, recurring revenue represented a substantial 96% of total revenues. The fourth quarter also saw a bookings growth rate of 28% and a continued increase in backlog, which rose 17% quarter-over-quarter and a striking 300% year-over-year.
The company’s robust sales momentum is attributed to a $79 million contracted backlog. Additionally, Asure’s efforts to accelerate cross-selling, coupled with consistent recurring revenue growth and new customer acquisitions, are expected to drive growth into 2025. InvestingPro data reveals that net income is expected to grow this year, with analysts predicting profitability in 2024. Stifel analysts have expressed confidence in Asure Software’s growth trajectory, maintaining both their Buy rating and the $11 price target. For deeper insights and additional ProTips on ASUR, including RSI analysis suggesting oversold conditions, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Asure Software reported its fourth-quarter earnings for 2024, revealing a significant miss on earnings per share (EPS), with a reported EPS of -$0.12 compared to the forecasted $0.19. Revenue for the quarter came in slightly below expectations at $30.79 million, just shy of the $30.8 million forecast. Despite these challenges, the company experienced a 17% increase in total revenues for the quarter, amounting to $30.8 million, and a 15% growth in recurring revenues, which now make up 96% of total revenues. The full-year revenue for 2024 was $119.8 million, with a net loss of $11.8 million, widening from the previous year’s $9.2 million loss.
Needham maintained its Buy rating on Asure Software with a $20 price target, highlighting the company’s fourth-quarter performance and the positive outlook for gross margins. The firm’s analyst noted that Asure Software’s recurring revenue was impacted by an acquisition that did not close as planned, yet the management has upheld their initial financial guidance for fiscal year 2025. Looking ahead, Asure Software has set a revenue guidance range of $134-$138 million for 2025, indicating mid-teens growth. The company aims to achieve EBITDA margins of 23-24% and is exploring a credit facility between $20 million and $60 million.
Asure Software also introduced several new products, including AssurePay and Luna, and signed a multi-year agreement with a leading firm in audit, tax, consulting, and advisory services to resell its payroll and payroll tax management solutions.
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