On Monday, EF Hutton adjusted its price target for LQR House, Inc. (NASDAQ:LQR), a company specializing in the alcohol niche market, while reiterating a Buy rating. The new price target is set at $5.00, down from the previous $7.00, following the company's reported March quarter results.
LQR House disclosed a higher net loss than anticipated, with $0.5 million in revenues, marking a 220% growth, a net loss of $2.4 million, and an EPS loss of $0.52. Despite the net loss, LQR House has demonstrated significant sales growth over the past months, with April seeing a 380% year-over-year increase.
LQR House's financial position includes $1.8 million in cash and $4.0 million in marketable securities in mutual funds as of the end of March, with 4.83 million shares outstanding as of May 15.
The company's recent performance has been bolstered by its robust technology infrastructure, mobile applications, and a lack of direct competition in the alcohol delivery sector. This follows the closure of Drizzly, a former key player, which was integrated into the Uber (NYSE:UBER) Eats app in March 2024.
The company's marketing strategy, which leverages top social influencers, has been effective in driving market share growth. LQR House has access to over 500,000 customer emails and benefits from seasonal sales, with half of its annual sales occurring from October to December, and January typically being the lowest revenue month.
The company generates revenue by onboarding new clients, with fees ranging from $2,500 to $5,000, or occasionally receiving alcohol products in lieu of fees.
EF Hutton's revised price target of $5.00 for LQR House is based on 2.5 times the firm's estimated 2024 enterprise value to sales (EV/Sales) of $8.0 million, or 1.5 times the estimated $15.2 million for 2025.
The company's strategy of working with influencers, who are compensated with 3-5% of the sales they drive to LQR's platform and can earn up to an 8% bonus, is highlighted as a key component of their success. Investors were reminded of the company's significant market share gains and solid marketing efforts.
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