On Thursday, H.C. Wainwright adjusted its stance on Versus Systems Inc. shares (NASDAQ:VS), lowering its price target to $1.50 from the previous $2.00, while keeping a Neutral rating on the stock. The revision reflects the latest financial data released by the company, which indicates a significant decline in revenue and a reduction in the number of customers.
Versus Systems reported revenue of $26,530 for the first quarter of 2024, a stark drop from the $158,000 recorded in the same period the previous year. The decrease is attributed to a reduction in the company's customer base, which has fallen from 16 to five.
Despite a substantial cut in operating expenses from $3.8 million in the first quarter of 2022 to $1.5 million in the same quarter of 2024, Versus Systems continues to experience a dwindling cash position due to operating losses.
The analyst from H.C. Wainwright noted that the financial results, which were detailed in the 10-Q filed on May 15, 2024, did not accompany a business update call with management. The ongoing cash burn suggests that Versus Systems may need additional capital in 2024, which could potentially dilute the value for current shareholders.
The analyst expressed a cautious outlook, indicating a lack of clear revenue catalysts and a decline in customer accounts, making it difficult to identify potential upside for the stock. While acknowledging the intrinsic value in the company's technology, the path to realizing this value remains uncertain.
The firm has opted to stay on the sidelines, awaiting more clarity on Versus Systems' near-term revenue prospects before adopting a more positive view.
The new stock price target of $1.50 reflects the current trading levels of Versus Systems shares and incorporates the challenges faced by the company in unlocking the value of its technology for shareholders.
InvestingPro Insights
Recent data from InvestingPro underscores the challenges faced by Versus Systems Inc. (NASDAQ:VS). With a market capitalization of just $3.58 million and a steep decline in revenue over the last twelve months as of Q1 2024, the company's financial position is precarious. The revenue plummeted by 85.18%, reflecting the concerns raised by H.C. Wainwright's analyst about the company's shrinking customer base and revenue streams.
InvestingPro Tips highlight that Versus Systems is trading at a low Price / Book multiple of 0.33, which could suggest that the stock is undervalued relative to its book value. Still, the company's lack of profitability over the last twelve months, with an Operating Income Margin of -5051.88%, and the absence of dividend payments to shareholders are significant deterrents for potential investors. Moreover, with a Price Total Return of -84.85% over the last year, the stock's performance has been far from encouraging.
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