Needham maintained its Buy rating on Alphatec Holdings (NASDAQ:ATEC) but reduced the price target to $13 from $23. The revision reflects a cautious stance on the company's free cash flow (FCF) breakeven timeline and near-term risks.
The firm's latest report indicates that Alphatec's journey to FCF breakeven by 2025 will necessitate a decrease in investments. The analysis suggests that while the path to breakeven becomes more achievable in 2026-2027, the company's long-range plan (LRP) metrics from 2024 to 2027 align with this projection.
Needham's commentary highlighted that achieving the breakeven point by 2025 is plausible, but it is still considered a "show me" story due to the slim margin for error.
The reduction in the price target to $13 is attributed to the current sentiment towards the stock and the balance of potential risks and rewards in the near term. Needham's stance continues to be positive on Alphatec Holdings, as indicated by the reiterated Buy rating, despite the lowered price expectations.
Investors are advised to monitor Alphatec's financial performance and strategic investment decisions, which will be critical to the company's success in achieving its FCF goals and justifying the confidence reflected in the Buy rating.
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