On Tuesday, Cantor Fitzgerald adjusted its price target for Desktop Metal Inc. (NYSE: NYSE:DM) shares, raising it significantly to $12.50 from the previous $1.25. The firm has retained its Overweight rating on the company's stock. This move follows Desktop Metal's announcement of a 1-for-10 reverse stock split of the company's Class A common shares.
The reverse stock split was approved by Desktop Metal's Board of Directors as a strategic measure to boost the company's share price. This action is aimed at ensuring the company meets the New York Stock Exchange's minimum per share bid price requirement for continued listing. The compliance issue arose after the company's common stock price fell below $1.00 over a consecutive 30-day trading period.
Desktop Metal was formally notified of the non-compliance with NYSE's continued listing standards on November 29, 2023. According to NYSE rules, Desktop Metal was given a six-month period to regain compliance with the exchange's requirements. The price target adjustment by Cantor Fitzgerald appears to reflect confidence in Desktop Metal's ability to meet the NYSE standards following the reverse stock split.
The reverse stock split is expected to reduce the number of Desktop Metal's shares traded on the market and proportionally increase the share price. This is a common tactic employed by companies facing similar listing compliance challenges.
The adjustment in price target by Cantor Fitzgerald to $12.50 signifies a substantial increase and maintains a positive outlook on Desktop Metal's stock. This reflects the firm's view that the reverse stock split will have the intended effect of elevating the company's share price to a level that satisfies the NYSE's listing criteria.
InvestingPro Insights
Following the recent news about Desktop Metal Inc. (NYSE: DM) and its strategic reverse stock split, investors may find the latest metrics and analysis from InvestingPro particularly illuminating. As of the latest data, Desktop Metal's market capitalization stands at a modest $162.32 million. The company's financial health shows signs of strain, with a negative P/E ratio of -0.94 for the last twelve months as of Q1 2024, which may indicate challenges in profitability. Moreover, the revenue has seen a decline of 8.54% over the same period. These figures suggest that the company is experiencing some financial headwinds.
Adding to the concerns, InvestingPro Tips highlight that Desktop Metal is quickly burning through cash and may have trouble making interest payments on its debt. Analysts have also revised their earnings downwards for the upcoming period, hinting at potential further financial challenges. However, it's worth noting that the company's liquid assets exceed its short-term obligations, which may provide some financial flexibility in the near term.
Investors looking to delve deeper into Desktop Metal's financials and future outlook can find additional InvestingPro Tips, offering a more comprehensive analysis. With the use of coupon code PRONEWS24, potential subscribers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, accessing a wealth of information that could help in making more informed investment decisions. As of now, there are 16 additional InvestingPro Tips available for Desktop Metal, which could be invaluable for investors considering this stock.
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