On Tuesday, Benchmark has increased its price target on CompoSecure Inc. (NASDAQ:CMPO) shares, setting the new goal at $10, up from the previous $8, while maintaining a "Buy" rating for the stock. The adjustment reflects Benchmark's continued confidence in CompoSecure's financial prospects.
The firm's decision to raise the price target is based on a valuation method that includes a blend of revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples.
Specifically, Benchmark applied a 2.5 times enterprise value (EV) to revenue multiple on their forecasted fiscal year 2025 revenue, alongside an 8 times EV/EBITDA multiple on the anticipated adjusted EBITDA for the same period.
According to Benchmark's analysis, CompoSecure's fiscal year 2025 is expected to generate $459.6 million in revenue. In terms of profitability, the company's adjusted EBITDA for the fiscal year 2025 is projected to reach $170.2 million. These figures form the foundation for the newly established price target.
The analyst from Benchmark reiterated their positive stance on CompoSecure, underscoring the rationale behind the price target upgrade. The assessment indicates a favorable outlook for the company's financial growth over the next couple of years.
InvestingPro Insights
CompoSecure Inc. (NASDAQ:CMPO) has shown a promising financial trajectory, which is reflected in the recent price target increase by Benchmark. To further understand the company's position, here are some key metrics and insights from InvestingPro. The company's market capitalization stands at a robust $584.23 million, and with a P/E ratio of 7, it presents as a potentially undervalued stock in comparison to industry peers. The adjusted P/E ratio for the last twelve months as of Q4 2023 is 7.79, indicating a stable earnings outlook.
InvestingPro Tips suggest that CompoSecure is expected to witness net income growth this year, and the company's valuation implies a strong free cash flow yield. Moreover, CompoSecure's liquid assets exceed its short-term obligations, providing a cushion for operational flexibility. Additionally, with a notable 47.66% return over the last three months, the company's stock is trading near its 52-week high, which could signal investor confidence in its near-term prospects. Additionally, analysts predict the company will be profitable this year, which aligns with the positive sentiment expressed by Benchmark.
For those considering an investment in CompoSecure, it's worth noting that the company does not pay a dividend, which may influence the investment strategy for income-focused portfolios. For further insights and a total of 7 InvestingPro Tips for CompoSecure, interested readers can explore InvestingPro. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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