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On Tuesday, Jefferies initiated coverage on Insyde Software Corp (TWO:6231) stock, a leading PC and server firmware provider, with a Buy rating and a price target of $616.00.
The firm's analysis pointed to Insyde's robust industry relationships and technological edge, which are expected to position the company favorably to benefit from the growth in BIOS/BMC markets driven by increased penetration of AI in PCs and servers.
The firm forecasts a significant compound annual growth rate (CAGR) for Insyde, projecting 20% in revenue and 43% in net profit from 2023 to 2030. This growth is anticipated to stem from higher average selling prices (ASP) and total addressable market (TAM) expansion due to the integration of AI technologies. Additionally, Insyde's royalty model is seen as a catalyst for economies of scale and net margin (NM) expansion.
Insyde's current trading at 24 times its estimated 2025 earnings per share (PE) or 0.7 times its price/earnings to growth (PEG) ratio is viewed by the firm as an attractive entry point for investors. The price target set by Jefferies is based on a 1.0 times PEG ratio for the year 2025, suggesting a potential 42% upside from the current levels.
The firm's positive outlook on Insyde Software hinges on the company's ability to capitalize on the growing demand for advanced PC and server technologies. The projected revenue and net profit growth, along with the scalability of Insyde's business model, underpin the Buy rating and the bullish price target.
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