On Monday, Seaport Global Securities launched coverage on Serve Robotics (NASDAQ:SERV), a company specializing in sidewalk delivery robots, with an optimistic outlook. The firm set a Buy rating and established a price target of $12.00 for the company's shares.
Seaport Global's endorsement is rooted in several key factors that suggest a promising future for Serve Robotics. The firm estimates a substantial total addressable market (TAM) for sidewalk robots in the U.S. ranging between $7 billion and $10.5 billion.
Serve Robotics, according to the analyst, is in a strong position to become a dominant player in the last-mile delivery sector due to its robust engineering team, advanced technology, and strategic partnerships, including a notable one with Uber (NYSE:UBER).
The firm anticipates that Serve Robotics will experience significant long-term revenue growth. This growth is expected to be fueled by the company's partnership with Uber Eats, expansion into additional delivery partnerships, and the growing contributions from branding and licensing fees.
Moreover, Seaport Global foresees that Serve Robotics will achieve EBITDA margins exceeding 30% in the long term, driven by economies of scale. This financial efficiency is projected to bolster the company's profitability as it expands its operations and market presence.
In other recent news, Serve Robotics Inc. has announced a series of strategic moves to expand its operations. The company has secured approximately $35 million in private placement transactions, with Aegis Capital Corp. facilitating the deals. In a groundbreaking partnership with Wing Aviation LLC, Serve aims to extend its delivery reach by integrating ground and aerial autonomous technologies.
Serve Robotics also revealed a collaboration with Shake Shack Inc (NYSE:SHAK). to utilize its autonomous robots for food deliveries via Uber Eats in Los Angeles. This initiative aligns with the company's strategy to deploy 2,000 delivery robots across the U.S. by 2025.
In terms of leadership, Euan Abraham has been promoted to Chief Hardware & Manufacturing Officer at Serve Robotics. During the company's recent annual stockholders meeting, Sarfraz Maredia and David Goldberg were elected as Class I directors, with their tenure extending until the 2027 annual meeting of stockholders.
The company has also expanded its delivery operations into Koreatown, Los Angeles, and upgraded its robotic fleet's sensors through an augmented lidar supply agreement with Ouster, Inc. In addition, Serve Robotics has solidified its partnership with Magna International (NYSE:MGA) through an exclusive contract manufacturing agreement.
InvestingPro Insights
Recent data from InvestingPro adds depth to Seaport Global's optimistic outlook on Serve Robotics (NASDAQ:SERV). The company's market capitalization stands at $368.48 million, reflecting investor interest in its innovative last-mile delivery solutions.
InvestingPro Tips highlight SERV's significant return over the last week, with a 10.31% price total return in the past seven days. This short-term momentum is even more pronounced over longer periods, with a striking 260.91% price total return over the last three months. These figures align with Seaport Global's bullish stance and suggest growing market confidence in Serve Robotics' potential.
However, it's important to note that SERV is not yet profitable, with a negative gross profit margin of -8.53% over the last twelve months. This aligns with the company's current growth phase and significant investments in technology and expansion, as mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for SERV, providing a deeper understanding of the company's financial health and market position.
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