Phunware (PHUN – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Darren Aftahi from Roth MKM maintained a Buy rating on the stock and has a $0.50 price target.
Darren Aftahi’s Buy rating for Phunware is based on a strategic shift within the company that is expected to improve its financial health and growth prospects. He points out that Phunware’s recent divestiture of Lyte and its transition towards a full SaaS model should streamline the company’s focus on higher-margin Platform-as-a-Service (PaaS) offerings. Aftahi also notes the positive impact of a new management team who have secured ample capital, which is poised to support Phunware in refining its sales strategies and returning to a growth trajectory. Additionally, he highlights the importance of pipeline growth in the platform business, with particular interest in the healthcare and hospitality sectors, and the implementation of a new cost structure that is expected to significantly reduce cash burn and improve liquidity.
Aftahi’s optimism is further substantiated by the expectation of reduced operational expenses and a healthier gross margin profile, following the removal of Lyte’s low-margin business. The anticipated new cost structure is projected to save Phunware around $6 million annually, contributing to a favorable adjustment in the company’s price target. Moreover, the recent capital raises, amounting to approximately $15 million, are believed to extend the company’s financial runway, providing a solid foundation for Phunware to leverage its lower cost base and rejuvenate its PaaS services. The re-evaluation of the price target to $0.50, up from $0.15, reflects these improvements and is based on a multiple of projected sales, underscoring Aftahi’s confidence in Phunware’s potential for growth and profitability.
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Phunware (PHUN) Company Description:
Phunware, Inc. engages in the development of a Multiscreen-as-a-Service platform, an enterprise cloud platform for mobile. It provides companies the products, solutions, data, and services necessary to engage, manage, and monetize mobile application portfolios and audiences at scale. Its platform also allows for the licensing and creation of category-defining mobile experiences for brands and their application users worldwide. The company was founded by Alan S. Knitowski and Luan Dang in February 2009 and is headquartered in Austin, TX.
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