Darren Aftahi, an analyst from Roth MKM, reiterated the Buy rating on Alarm (ALRM – Research Report). The associated price target is $67.00.
Darren Aftahi has given his Buy rating due to a combination of factors that indicate a promising future for Alarm.com Holdings, Inc. (ALRM). Firstly, ALRM’s 3Q results surpassed expectations in all key metrics, including SaaS sales, EBITDA, and EPS. The company’s 4Q guide suggests even stronger SaaS and EBITDA performance. Furthermore, ALRM’s preliminary 2024 guide indicates a potential 8% SaaS growth and an EBITDA that exceeds both Aftahi’s model and the market consensus. The growth drivers that boosted the company’s sales in 2023, such as video, International, and Commercial, are expected to continue propelling the company forward into 2024 and beyond.
In addition to these positive indicators, ALRM maintains one of the highest retention rates in the industry, suggesting a strong customer base. The company’s overall SaaS revenue grew by 13.9% year-on-year, largely thanks to products related to Energy Hub, Commercial, International, and video. This growth led to an increase in gross margins, adjusted EBITDA, and profits, while strong working capital management resulted in a notable free cash flow figure. Despite the anticipated impact of the termination of its relationship with ADT, ALRM’s 2024 SaaS sales are projected to be higher than Aftahi’s model. Given ALRM’s history of conservative forecasting, the initial 2024 guide of approximately 8% growth is seen as promising. In conclusion, Aftahi’s Buy rating is based on ALRM’s strong financial performance, growth potential, and high customer retention rates.
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Alarm (ALRM) Company Description:
Alarm.com Holdings, Inc. engages in the provision of wireless and web-enabled security system technology. The company offers security, video monitoring, and energy management solutions. It operates through the Alarm.com and Other segments. The Alarm.com segment represents cloud-based platform for the connected home and related connected home solutions. The Other segment focuses on the research and development of home and commercial automation, as well as energy management products and services. The company was founded by Jean-Paul Martin and Alison J. Slavin in 2000 and is headquartered in Tysons, VA.
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