H.C. Wainwright has maintained its Buy rating and $1.00 price target on shares of Splash Beverage Group Inc. (NYSE: SBEV), a beverage company.
The firm's optimism is based on several anticipated catalysts that are expected to propel the stock higher in the forthcoming quarters. The company, after the market closed last Thursday, held a call to discuss its second-quarter 2024 results and provided an outlook that included several strategic moves.
Despite reporting quarterly revenue of just $1.0 million, which fell short of the $1.6 million estimate due to capital constraints, the firm sees positive developments ahead.
On Monday last week, Splash Beverage announced the receipt of an initial $4.0 million from its funding agreement, with an additional $3.0 million expected soon. This financial boost is seen as a precursor to future growth.
The company also indicated that it is on track to finalize the acquisition of Western Son Vodka by the end of 2024, a move that is anticipated to immediately enhance financial performance and stability.
The acquisition is also expected to lead to operational savings across Splash Beverage's brand portfolio. With the injection of new capital, the company forecasts generating $38.0 million to $40.0 million in revenue in 2025, with positive EBITDA projected for the second half of the year.
H.C. Wainwright's analyst cited the company's position at an inflection point, suggesting a trajectory toward improving operating performance. The firm encourages investors to build their positions in Splash Beverage now in anticipation of stronger financial results, a clearer path to profitability, and the potential for more mergers and acquisitions.
In other recent news, Splash Beverage Group Inc. shareholders have given a nod to a substantial stock issuance, signifying a major step for the company and showcasing investor confidence in its strategic decisions.
The company also reported a decrease in revenue and gross margin for the fourth quarter of 2023 and the first quarter of 2024 due to capital constraints. In response, analyst firms Roth/MKM and H.C. Wainwright have lowered their price targets for the company to $1.00 and $1 respectively, while maintaining a Buy rating.
Further, Splash Beverage has initiated a retail test for its Copa di Vino premium single-serve wine brand in select Walmart (NYSE:WMT) and Walgreens stores, a move that could potentially lead to a nationwide rollout. The company also announced the appointment of Julius Ivancsits as its new Chief Financial Officer, bringing in additional experience to the team.
Despite facing financial challenges, Splash Beverage reported a net revenue of $18.9 million for the year ended December 2023, falling short of the $22.2 million revenue estimate.
InvestingPro Insights
As Splash Beverage Group Inc. (NYSE:SBEV) works towards its strategic goals, including the acquisition of Western Son Vodka, it's important for investors to consider current financial metrics and analyst insights. According to InvestingPro data, the company has a market capitalization of $25.17 million and has experienced a significant revenue decline in the last twelve months as of Q2 2024, with revenues falling by nearly 49.61%. This decline is echoed in the quarterly figures, where revenue dropped by 79.85%. Despite these challenges, the stock has shown strong returns over the last month and three months, with increases of 29.2% and 54.23%, respectively.
InvestingPro Tips indicate that Splash Beverage may face difficulties in making interest payments on debt and is quickly burning through cash, which could be a concern for investors. Furthermore, analysts do not anticipate the company will be profitable this year, and short-term obligations exceed liquid assets. However, there are also positive notes, such as the strong return over the recent months. For investors looking for a deeper dive into the company's financial health, there are additional InvestingPro Tips available at https://www.investing.com/pro/SBEV, which could provide further insights into the company's investment potential.
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