Tuesday, DA Davidson announced a reduction in the price target for SmartRent (NYSE: SMRT), now set at $3.25, decreased from the previous target of $3.75. Despite the price target adjustment, the firm continues to recommend a Buy rating for the company's stock.
The adjustment comes as DA Davidson recalibrates its 2024 revenue forecast for SmartRent, expecting a roughly 3% decline. This is attributed to lower unit deployment projections, which are affected by the current interest rate environment and broader macroeconomic challenges. Nevertheless, the firm's outlook for SmartRent's 2024 adjusted EBITDA has improved slightly, moving up from $6.3 million to $7.0 million. The increase is due to better-than-expected gross margin assumptions for Professional Services, which help to counterbalance the impact of the revised revenue expectations.
DA Davidson's updated 12-month price target is primarily based on a sum-of-the-parts (SOTP) valuation method. The new target implies a 1.7 times multiple on the firm's estimated 2024 enterprise value to total revenue (EV/Total Revs) for SmartRent.
The report reflects a cautious but still optimistic stance on SmartRent's financial performance amidst economic headwinds. By maintaining a Buy rating, DA Davidson signals its belief that, despite the downward adjustment in the price target, SmartRent remains a potentially valuable investment. The revised price target and financial estimates are aligned with the firm's latest analysis of market conditions and SmartRent's business prospects.
InvestingPro Insights
In light of DA Davidson's revised price target for SmartRent, current InvestingPro data provides a broader context for investors considering the company's stock. SmartRent holds a market capitalization of $570.77 million, reflecting the scale of the company within its industry. Notably, the company's stock price movements have been quite volatile, which could be a point of consideration for risk-averse investors. Despite this volatility, SmartRent's liquid assets exceed its short-term obligations, which may offer some reassurance regarding the company's ability to meet its immediate financial liabilities.
Valuation metrics show that SmartRent has a negative P/E ratio of -16.84, indicating that it has not been profitable over the last twelve months. However, analysts predict the company will become profitable this year. This forward-looking optimism is echoed in DA Davidson's maintained Buy rating. Additionally, SmartRent's revenue growth over the last twelve months stands at 13.66%, a sign of expansion that may align with DA Davidson's positive gross margin assumptions for the company's Professional Services.
For investors seeking a deeper analysis, InvestingPro offers additional insights with tips such as SmartRent's cash position relative to debt and the lack of dividend payments to shareholders. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There are 5 more InvestingPro Tips available for SmartRent, which could further inform investment decisions.
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