On Friday, H.C. Wainwright adjusted its outlook on Splash Beverage Group Inc. (NYSE:SBEV), reducing the price target to $0.50 from the previous $1.00 while maintaining a Buy rating on the stock. The adjustment comes after Splash Beverage Group hosted a conference call earlier in the week to discuss its third-quarter results for 2024, ongoing mergers and acquisitions (M&A) efforts, and updates on capital raising initiatives.
During the call, the company addressed the challenges it faces with quarterly revenue due to the reallocation of funds from its e-commerce business to support the beverage portfolio. InvestingPro data reveals a concerning 70% year-over-year revenue decline and rapidly depleting cash reserves.
Despite these hurdles, management is now redirecting investment into the e-commerce platform, which is expected to bolster revenue in the fourth quarter of 2024 and into 2025. Nevertheless, the exact timing of these improvements is still uncertain as the company awaits the completion of its previously announced financing deals.
Splash Beverage Group is actively pursuing M&A opportunities to enhance its business stability and financial performance. This includes the acquisition of Western Son Vodka and the signing of a letter of intent to purchase an energy drink company. The successful completion of these deals is anticipated to bring significant changes to the company's financial landscape and create operational savings across its brand portfolio.
The company's management has expressed confidence in securing adequate funding and finalizing the M&A transactions heading into 2025. However, due to the current lack of clarity on the timing of these developments, H.C. Wainwright has revised its revenue forecasts for 2024 and 2025, leading to the new price target.
The firm continues to recommend a Buy rating, citing an ongoing favorable risk-reward scenario for the stock.
In other recent news, Splash Beverage Group Inc. has reported a number of significant developments. The company disclosed its second-quarter 2024 results with a revenue of $1.0 million, falling short of the estimated $1.6 million due to capital constraints. However, the firm has announced the receipt of an initial $4.0 million from a funding agreement, with an additional $3.0 million expected in the near future.
Furthermore, Splash Beverage is set to complete the acquisition of Western Son Vodka by the end of 2024, a strategic move anticipated to improve financial performance and result in operational savings. With this acquisition and the new capital injection, the company forecasts a revenue generation of $38.0 million to $40.0 million in 2025, with positive EBITDA projected for the latter half of the year.
In terms of governance, the company's stockholders have elected five individuals to the board of directors and ratified the appointment of Rose, Snyder & Jacobs LLP as the independent registered accounting firm for the fiscal year ending December 31, 2024. They also approved two separate proposals regarding the issuance of common stock.
H.C. Wainwright has maintained its Buy rating on the company, encouraging investors to build their positions in anticipation of stronger financial results. However, due to capital constraints, Roth/MKM and H.C. Wainwright have lowered their price targets for the company.
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