Tuesday, Benchmark maintained its Speculative Buy rating and $4.00 price target for Peraso, Inc. (NASDAQ:PRSO), following the company's recent business developments. The wireless technology firm has garnered multiple new purchase orders for its DUNE platform, signaling increasing market traction.
Peraso's latest purchase order comes from a Kenyan wireless internet service provider (WISP), which is transitioning from 5GHz to 60 GHz technology to enhance service quality and scalability while improving customer economics. This shift is part of a larger trend as Kenya, with its 22 million internet users, represents a significant market opportunity for Peraso.
The analyst from Benchmark highlighted the potential financial impact of the Kenyan project. An estimated 100,000 users could translate to approximately $6 million in revenue, with a gross profit (GP) of $2.4 million. However, the actual size of the deal is expected to be larger, given the technological upgrade and the accelerated rollout schedule.
The positive outlook on Peraso's DUNE platform is based on its growing design win pipeline and the company's ability to secure substantial projects. Benchmark's reiterated rating and price target reflect confidence in Peraso's business strategy and market position.
Investors are keeping a close eye on Peraso as it continues to execute its growth plan and capitalize on opportunities within the expanding wireless technology market. The company's recent achievements and the analyst's reiteration of the buy rating and price target underscore its potential for revenue growth.
In other recent news, Peraso Inc (NASDAQ:PRSO). has reported robust Q2 2024 results, with revenues surpassing expectations at a total of $4.2 million, marking over 50% sequential growth and over 70% year-over-year growth. This increase was driven by increased shipments of end-of-life memory IC products and a new volume production order for millimeter-wave antenna modules.
Despite reporting net losses on both GAAP and non-GAAP bases, Peraso has a significant backlog of non-cancelable purchase orders and a growing pipeline of customer engagements for millimeter-wave solutions.
In addition, Peraso has secured a significant purchase order from a Kenyan wireless Internet service provider for its DUNE platform, signaling a key advancement in the deployment of 60GHz technology on the African continent. The company is also making strides in enhancing internet connectivity in the public transportation systems of Korea and China through its High-Velocity Roaming technology.
The company anticipates third-quarter IC memory product shipments to be in line with the second quarter and remains focused on converting customer engagements into production orders for its millimeter-wave products.
InvestingPro Insights
While Benchmark maintains a positive outlook on Peraso, Inc. (NASDAQ:PRSO), recent InvestingPro data paints a more complex picture of the company's financial health. As of the last twelve months ending Q2 2024, Peraso reported revenue of $13.37 million, with a concerning revenue growth decline of -8.55%. This contrasts with the potential $6 million revenue from the Kenyan project mentioned in the article.
InvestingPro Tips highlight that Peraso is "quickly burning through cash" and "suffers from weak gross profit margins." The latter is evident in the reported gross profit margin of 22.4%, which may impact the projected gross profit from new projects. Additionally, the company's operating income margin stands at a concerning -133.43%, indicating significant operational challenges.
On a positive note, Peraso "holds more cash than debt on its balance sheet," which could provide some financial flexibility as it pursues growth opportunities like the Kenyan WISP project. However, investors should be aware that the company is "not profitable over the last twelve months" and "analysts do not anticipate the company will be profitable this year."
For a more comprehensive analysis, InvestingPro offers 11 additional tips for Peraso, providing deeper insights into the company's financial position and market performance.
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