On Friday, Aviat Networks , Inc. (NASDAQ:AVNW) had its stock price target reduced by an analyst from B.Riley. The new target is set at $42.00, down from the previous $55.00, while the Buy rating remains unchanged. The adjustment follows the company's announcement on Wednesday that it will delay its annual 10-K filing.
Aviat Networks has been granted a 15-day extension to finalize its financial reports for the fiscal year 2024 due to identified material weaknesses in financial reporting. The concerns are believed to be associated with the integration of the recently acquired Pasolink.
The preliminary financial results for the fiscal year 2024 were shared by the company, indicating that the fourth-quarter revenue was essentially unchanged from the previous quarter, missing the market's expected 3.6% quarter-over-quarter growth. The rest of the financial figures conformed to GAAP standards. Aviat Networks is planning to hold an earnings call towards the end of September to discuss the details further.
In response to these developments, B.Riley has also revised its earnings per share (EPS) and adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) forecasts for the fiscal year 2025. The EPS estimate has been decreased from $3.61 to $3.15, and the AEBITDA forecast has been lowered from $61.0 million to $54.0 million.
The new stock price target of $42 is based on a revised cash-adjusted price-to-earnings (P/E) multiple of 13 times, down from the earlier 15 times, applied to the fiscal year 2025 EPS estimate.
Despite these adjustments, the analyst maintains a positive outlook on Aviat Networks' stock, citing valuation as the basis for the continued Buy rating. The company's management is expected to provide more clarity and address the financial reporting weaknesses during the upcoming earnings call.
InvestingPro Insights
Aviat Networks, Inc. (NASDAQ:AVNW) appears to be navigating a challenging period, with recent price movements reflecting investor concerns. According to real-time data from InvestingPro, the company's market capitalization stands at $263.75 million, and the stock is trading at a P/E ratio of 18.15. Despite the recent price target reduction by B.Riley, InvestingPro Tips suggest that net income is expected to grow this year, which could bring long-term benefits to shareholders.
Furthermore, the stock's recent performance indicates it may be in oversold territory, as suggested by the Relative Strength Index (RSI). This could potentially signal a buying opportunity for contrarian investors or those looking for value. With the company's strong free cash flow yield implied by its valuation, Aviat Networks presents an interesting case for investors seeking companies with solid financial health.
It is noteworthy that Aviat Networks has experienced significant price declines over the last week, month, and three months, with the one-week total return at -16.87%, one-month at -22.23%, and three-month at -30.08%. However, the company's liquid assets exceed its short-term obligations, which may provide some reassurance regarding its ability to meet immediate financial liabilities.
For those interested in a deeper analysis, InvestingPro provides additional tips to help investors make informed decisions. Currently, there are 15 more InvestingPro Tips available for Aviat Networks, which can be found at https://www.investing.com/pro/AVNW. These tips offer insights into earnings revisions, stock volatility, debt levels, and profitability, among other metrics.
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