Tuesday, Canaccord Genuity revised its stock price target for Lantronix , Inc. (NASDAQ: NASDAQ:LTRX), a global provider of secure data access and management solutions for the Internet of Things (IoT), reducing it to $5.00 from the previous $7.50. Despite the price target adjustment, the firm maintained a Buy rating on the company's shares.
The new price target is based on approximately 13 times the firm's fiscal year 2026 estimated non-GAAP earnings per share (EPS) of $0.38. This projection is conservative compared to the company's peers in the IoT, semiconductor, sustainability, and networking sectors, which are currently trading at around 19 times their calendar year 2026 estimated EPS according to FactSet consensus.
The rationale behind the discounted target multiple includes several factors. Canaccord Genuity is taking a cautious approach as it anticipates potential future acquisitions by Lantronix, which could enhance the company's growth prospects. Moreover, the firm is looking for follow-on orders from Lantronix's largest customer, Gridspertise, and Turkish automotive OEM, Togg, which would signify continued business momentum.
Another consideration affecting the price target is the pending appointment of a new, permanent Chief Financial Officer (CFO) for Lantronix. The firm suggests that the arrival of a new CFO could provide additional financial guidance and stability, contributing positively to the company's valuation.
In summary, while the price target for Lantronix has been lowered, Canaccord Genuity's outlook remains optimistic, as reflected in the maintained Buy rating. The firm's anticipation of strategic acquisitions, key customer follow-on orders, and executive management appointments are pivotal factors influencing the future financial performance and valuation of Lantronix.
In other recent news, Lantronix Inc. reported a modest 4% year-over-year revenue growth, totaling $34.4 million for the first quarter of fiscal year 2025. The non-GAAP earnings per share (EPS) were reported at $0.06. The company's acquisition of NetComm's IoT product line is anticipated to significantly boost its revenue in the coming year. Moreover, Lantronix's collaboration with Qualcomm (NASDAQ:QCOM) on Edge AI is projected to influence its market position from 2026 onward.
In light of these recent developments, Lantronix provided a cautious revenue outlook for Q2 FY2025, projecting revenue between $29 million and $33 million and non-GAAP EPS ranging from $0.01 to $0.05. This projection excludes contributions from the NetComm acquisition. The company also noted challenges with a major automotive customer in Turkey and slowdowns in federal projects.
Despite these challenges, the company remains bullish about its growth prospects, forecasting a 20% growth for 2025 following the NetComm integration. Lantronix also highlighted positive developments in Smart Grid deployments in Europe and emerging opportunities in North America and Latin America. The company continues to focus on profitable growth and innovation in Edge intelligence.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Lantronix's financial position and market performance. The company's market capitalization stands at $100.04 million, reflecting its current valuation in the IoT and data management solutions sector. Lantronix has demonstrated strong revenue growth, with a 22.12% increase in the last twelve months, aligning with Canaccord Genuity's optimistic outlook on the company's potential.
However, investors should note that Lantronix is currently not profitable, with a negative P/E ratio of -20.69. This aligns with the firm's operating income of -$1.11 million over the last twelve months. Despite this, InvestingPro Tips suggest that net income is expected to grow this year, and analysts predict the company will be profitable this year, which could support Canaccord Genuity's maintained Buy rating.
The stock's recent performance has been challenging, with a 30.85% decline in the past week and a 35.08% drop over the last month. This volatility is reflected in an InvestingPro Tip noting that the stock's price movements are quite volatile. However, another tip indicates that the RSI suggests the stock is in oversold territory, which could present a potential opportunity for investors aligned with Canaccord Genuity's long-term view.
For readers interested in a more comprehensive analysis, InvestingPro offers 15 additional tips for Lantronix, providing a deeper understanding of the company's financial health and market position.
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