Monday, Maxim (NASDAQ:MXIM) Group adjusted its price target for Amplitech Group Inc. (NASDAQ: AMPG) shares, lowering it to $5.00 from the previous $6.00 while maintaining a Buy rating on the stock. This revision follows Amplitech's recent business update call, which came after the company reported its second-quarter financial results on August 14, 2024.
For the second quarter of 2024, Amplitech reported revenue of $2.5 million, a 10% increase from the previous quarter but a decline year-over-year and below Maxim Group's $3.0 million estimate. The company also reported an adjusted EBITDA loss of $1.5 million, slightly wider than anticipated. Management did not provide new guidance but noted that its pipeline now totals $130 million, up from over $120 million at the end of 2023.
The company is currently initiating its 5G segment product cycle and anticipates that this will contribute to 75%-80% of its revenues in 2025. Despite the slower start to the year, Maxim Group remains optimistic about Amplitech's management and various revenue opportunities. The firm believes that the previously provided revenue guidance for 2024, which was between $35 million and $40 million, is now a more reasonable target for 2025.
Maxim Group continues to expect an improvement in revenue in the latter half of the year as the company begins converting its pipeline. Growth is also expected to accelerate throughout 2025 due to increased purchase orders related to products for 4G/5G tower upgrades, virtual 5G private networks, quantum computing, and satellite communications (SATCOM).
The Buy rating has been reiterated, but the price target has been adjusted based on a discounted cash flow (DCF) analysis, reflecting a calendar year 2025 enterprise value to EBITDA (EV/EBITDA) multiple of 8.0x.
In other recent news, AmpliTech Group has been making significant strides in the 5G market. The company secured an initial order from the University of Edinburgh for its 5G radio products, marking a new foray into the educational sector. Moreover, AmpliTech's bookings surpassed $1 million in August, with significant orders from a new domestic client and Paramount.
The company also announced a Memorandum of Understanding to establish a Private 5G Network (LON:NETW) in California, its first 5G deployment in the continental United States. Furthermore, AmpliTech secured exclusive licensing rights for specific 5G telecom equipment in the United States, supported by a $1.3 million loan from Altbanq Lending II LLC.
Investment firm Maxim Group revised AmpliTech's 2024 financial outlook, reducing the share price target but maintaining a positive outlook for 2025. The company has also introduced new Cryogenic Power Supplies for the quantum computing industry. These recent developments underscore AmpliTech's commitment to technological advancement and financial stability.
InvestingPro Insights
Following the recent price target adjustment by Maxim Group, a deeper look at Amplitech Group Inc. (NASDAQ: AMPG) through the lens of InvestingPro offers additional insights. According to InvestingPro data, Amplitech has a market capitalization of approximately $9.32 million, reflecting the size of the company in the competitive tech landscape.
Despite the challenges highlighted in the article, InvestingPro Tips suggest that analysts are still anticipating sales growth in the current year, which aligns with the management's positive outlook on revenue opportunities.
Moreover, the stock is currently trading at a low Price / Book multiple of 0.45, potentially indicating that the stock is undervalued relative to its book value. This could be of interest to value investors looking for opportunities in the tech sector. However, it is important to note that the company has not been profitable over the last twelve months, and analysts do not anticipate Amplitech will be profitable this year. This could be a point of concern for investors focusing on immediate profitability.
For those interested in a comprehensive analysis, there are over 12 additional InvestingPro Tips available, which could provide further guidance on the potential risks and opportunities associated with Amplitech shares. These tips, along with real-time data and metrics, can be accessed through InvestingPro's platform.
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