Napco Security Technologies (NASDAQ:NSSC) has had a great run on the market, with share prices up by a significant 51% over the last three months.
Napco is a leading manufacturer of security products, developing advanced technologies for intrusion, fire, video, wireless, access control, and door locking systems.
Its products are used for commercial, industrial, institutional, residential, and government applications.
Given that the market rewards strong financials in the long term, analyst Gianni Di Poce sees even further upside for the company given it is in a growth stage.
"The historical EPS growth for NSSC has been 20.4%, but projected EPS growth in the next year is expected to top 65%," Di Poce wrote in his weekly Benzinga Pro Insider Report. "Year-over-year cash flow growth was 21%, significantly higher compared to industry peers, which actually lost 2.1% year-over-year."
The call: 25% potential return for investors:
"I am bullish on NSSC so long as the stock remains above $26.00-$27.00," the analyst wrote, "upside target $38.00-$40.00."
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Napco recently reported its fourth quarter fiscal 2022 results that showed that the company is still grappling with supply chain backlogs, but recurring revenue and demand for their goods and services is pent up, helping secure future business in the coming years.
Net sales for the quarter increased 22% to a quarterly record of $43.2 million, as compared to $35.4 million for the same period last year. Recurring service revenue for the quarter increased 33% to $12.7 million as compared to $9.5 million for the same period last year.
"Our balance sheet continues to be very strong," the company said during its earnings call, "with cash and cash equivalents and marketable securities of $46.8 million and no debt at June 30, 2022."
From a technical perspective, the stock is displaying notable relative strength compared to the broader market, and just made a higher-high this past week after breaking out from a massive saucer pattern.
Other analyst ratings: Lake Street, Canaccord Genuity, and Needham & Co recently maintained their buy rating on NSSC, as detailed in Benzinga's analyst ratings and price action data.
Image: benzinga.com