On Friday, Roth/MKM initiated coverage on AudioEye (NASDAQ:AEYE) shares, a digital accessibility platform provider, with a Buy rating and a price target of $25.00. The firm's stance is based on the expectation that recent regulatory changes will increase demand for web and application accessibility, potentially benefiting AudioEye significantly.
The firm highlighted the value of AudioEye's Cloud Services franchise, emphasizing the company's position to capitalize on the growing need for digital accessibility. With regulations expected to drive website and application providers to enhance accessibility, AudioEye stands to gain from the market shift.
Roth/MKM also pointed to AudioEye's business model, noting the attractiveness of its recurring revenue stream. The firm projects a strong rebound in revenue growth for AudioEye, forecasting a 17.5% increase in the fourth quarter of 2024, a significant rise from the 4.0% growth anticipated in the first quarter of the same year.
In terms of profitability, Roth/MKM expects AudioEye to see an improvement, predicting a 13% adjusted EBITDA (AEBITDA) margin in 2024, which marks an increase from the 4% margin observed in 2023. This projection suggests a positive outlook for the company's financial performance in the near future.
Overall, Roth/MKM's coverage initiation reflects a positive view of AudioEye's prospects, with anticipated regulatory tailwinds and a strong business model contributing to the firm's optimistic price target and Buy rating for the company's stock.
In other recent news, AudioEye has been making significant financial strides. The company reported robust first quarter results, with record revenues of $8.1 million and a 10% increase in annual recurring revenue (ARR) from the previous quarter. Adjusted EBITDA for the quarter was also impressive at $920,000, or $0.08 per share, marking a $1 million improvement year-over-year.
Based on these strong results, the company has raised its full-year revenue guidance to between $34.3 million and $34.7 million. B.Riley, an analyst firm, maintained a Buy rating on AudioEye and increased the stock price target to $18.50 from $14.00, attributing this decision to the company's solid financial performance.
Furthermore, the firm noted that the positive results were driven by growth in partner/marketplace and enterprise channels, as well as continued operational expenditure leverage.
B.Riley has adjusted its fiscal year 2024 and 2025 estimates for AudioEye, citing the company's consistent execution, upcoming regulatory demand tailwinds, and the potential for accelerated revenue growth and margin expansion in the future. These developments indicate a promising outlook for AudioEye.
InvestingPro Insights
As AudioEye (NASDAQ:AEYE) garners a favorable outlook from Roth/MKM, InvestingPro data and tips provide additional insights into the company's financial landscape. With a market capitalization of $215.91 million, AudioEye's growth trajectory is underlined by a gross profit margin of 77.76% for the last twelve months as of Q1 2024, showcasing the company's efficiency in managing its cost of goods sold. Despite a negative P/E ratio of -45.93, reflecting challenges in current profitability, analysts have revised their earnings upwards for the upcoming period, signaling potential for future income growth.
An impressive 330.0% six-month price total return indicates a strong market performance, while the company's high Price / Book multiple of 43.93 suggests investors are willing to pay a premium based on the company's book value. Moreover, the InvestingPro Tips highlight an expected net income growth this year and a strong return over the last three months, further bolstering the case for investor optimism.
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