On Thursday, Canaccord Genuity adjusted its stance on Alarum Technologies (NASDAQ:ALAR) stock, shifting from a Hold to a Buy rating, and established a price target of $42.00.
The upgrade comes in the wake of a significant approximately 35% decline in Alarum's stock price following the company's preliminary second-quarter results, which were largely in line with expectations.
The investment firm's decision reflects a belief that the recent selloff was an overreaction to a modest decrease in quarter-over-quarter incremental net-new revenue.
Canaccord Genuity points to NetNut growth as a more reliable measure of Alarum's business momentum, noting an achievement of $8.6 million, which is slightly above their estimate of $8.5 million. This figure also represents a $0.5 million increase from the first quarter and a 70% year-over-year growth.
Canaccord Genuity anticipates that Alarum Technologies will continue to experience nominal pressure on total revenue growth over the next three to four quarters. This is attributed to the company's strategic moves, including the divestiture of its enterprise security business and the wind-down of its consumer security business.
Despite these pressures, the firm maintains a positive outlook on Alarum's future, predicting that the company will exhibit one of the best growth and margin profiles in the software industry in 2024 and 2025. Canaccord Genuity asserts that Alarum Technologies is on track to rank either second or at the very top in terms of performance within the sector during those years.
In summary, Canaccord Genuity views the recent drop in Alarum Technologies' stock price as a mispricing and recommends the current lower valuation as an opportune buying moment for investors.
In other recent news, Alarum Technologies has reported a substantial Q1 revenue growth in 2024, marking a 139% increase to $8.1 million compared to the same period of the previous year. The company also reversed its financial fortunes by posting a net profit of $1.4 million.
This robust performance is attributed to the successful launch of products such as the Website Unblocker and the AI Data Collector, which have contributed to customer growth and a high net retention rate (NRR) of 1.66.
Alarum's cash reserves have also seen an upswing, reaching $15.1 million. The company has managed to maintain a favorable tax rate of 12%, contingent on its ongoing R&D investments. The firm plans to continue focusing on revenue growth and profitability, with new product updates receiving positive feedback.
Despite these positive developments, Alarum does not anticipate its new products to significantly impact revenues within the current year. However, the company is optimistic about the continued positive financial trends into the second quarter. It is important to note that these are recent developments and are subject to change.
InvestingPro Insights
Adding to the perspective provided by Canaccord Genuity, recent data from InvestingPro reveals a nuanced picture of Alarum Technologies' financial health and market performance. With a market capitalization of $188.26 million, Alarum holds more cash than debt on its balance sheet, providing a cushion for future operations. The company's stock has been characterized by high price volatility, which is echoed by the significant price movements over the past six months and year. Despite not being profitable over the last twelve months, analysts are optimistic, predicting sales growth in the current year and forecasting profitability.
InvestingPro Tips suggest that Alarum's liquid assets exceed short-term obligations, which is a positive sign for meeting upcoming financial commitments. Additionally, the company's revenue has grown by 42.97% in the last twelve months as of Q1 2024, indicating a strong upward trajectory in sales. Investors should note that while the company does not pay dividends, its significant revenue growth and anticipated sales increase may offer potential capital appreciation opportunities.
For a deeper analysis and more InvestingPro Tips on Alarum Technologies, investors can visit Investing.com/pro/ALAR. With the use of the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to additional valuable insights. Currently, there are 12 additional InvestingPro Tips available that could further inform investment decisions regarding Alarum Technologies.
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