On Tuesday, Roth/MKM made a significant adjustment to its price target for Splash Beverage Group Inc. (NYSE:SBEV), reducing it from $2.85 to $1.00, while still endorsing the stock with a Buy rating. The revision reflects the impact of capital constraints on the company's recent financial performance.
Splash Beverage's fourth quarter of 2023 and first quarter of 2024 results were notably affected by limited funding, leading to a decrease in both revenue and gross margin. The analyst from Roth/MKM anticipates that the downward pressure on the company's finances will begin to alleviate starting in the third quarter of 2024. This outlook assumes Splash Beverage's success in its current efforts to secure significant capital necessary to sustain its operations.
In light of the financial challenges and the anticipated need for additional borrowing to support future growth, Roth/MKM has decided to lower the price target. Despite this adjustment, the firm maintains a positive outlook on the stock, sustaining its Buy rating.
The updated price target takes into account the immediate financial hurdles faced by Splash Beverage. The company is expected to continue its pursuit of capital raising initiatives to bolster its financial standing and fund its expansion plans. Roth/MKM's analysis suggests that, if these efforts are fruitful, there may be a potential for recovery in the latter half of 2024.
In other recent news, Splash Beverage Group has seen a flurry of developments. The company has initiated a retail test of its Copa di Vino premium single-serve wine brand in select Walmart (NYSE:WMT) and Walgreens stores, which could potentially lead to a nationwide rollout across thousands of these stores. Simultaneously, Splash Beverage has appointed Julius Ivancsits as its new Chief Financial Officer, who brings a wealth of experience from his previous roles at Hexo Corporation, Goba Capital, and Alpha Measurement Solutions.
Addressing its going concern opinion, Splash Beverage expressed its commitment to sustainable growth and long-term viability, despite limited operating capital. CEO Robert Nistico expressed confidence in the company's business model and its ability to secure additional resources for its growth strategy.
However, H.C. Wainwright has lowered its price target for Splash Beverage from $2.50 to $1, while maintaining a Buy rating. This revision followed the company's disclosure of its financial results for the year ended December 2023, where it reported net revenue of $18.9 million, falling short of the $22.2 million revenue estimate. Despite these challenges, the analyst firm believes that Splash Beverage's current market valuation does not fully account for its assets, including its ecommerce platform, Qplash.
InvestingPro Insights
As Splash Beverage Group Inc. (NYSE:SBEV) navigates through its financial headwinds, real-time data from InvestingPro offers a detailed look into the company's current standing. With a market capitalization of just $11.39 million and a striking revenue decline of 27.1% over the last twelve months as of Q1 2024, the company's financial resilience is under scrutiny. Investors should note the substantial gross profit margin of 27.26%, which, despite the revenue setback, indicates some efficiency in the company's cost management.
However, an InvestingPro Tip points out the company's significant debt burden, which may compound the difficulties of making interest payments. Additionally, the company's stock price has experienced considerable volatility, with a notable 9.63% return over the last week, yet a steep 75.26% decline over the past year, underscoring the risks associated with its investment.
For those considering a deeper dive into SBEV's financials and future prospects, InvestingPro offers an array of additional tips. There are 14 more InvestingPro Tips available that could provide further insights into Splash Beverage's performance and outlook. For anyone looking to leverage these insights, consider using the coupon code UK10 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.