On Wednesday, BTIG adjusted its price target on SmartRent (NYSE:SMRT) to $4.30 from $4.50, while keeping a Buy rating on the stock. The firm noted that SmartRent's fourth-quarter revenue for 2023 was approximately 1% higher than the consensus, with adjusted EBITDA of $0.7 million aligning with expectations.
Despite this, shares dropped around 10% at one point on Tuesday but managed to close with a smaller loss of 4.5% for the day. This movement was attributed to the company’s fiscal year 2024 revenue and adjusted EBITDA guidance, which did not meet expectations.
BTIG acknowledged the mixed reactions to SmartRent's performance and outlook. Critics might focus on the slowdown in revenue growth, a 23% year-over-year decrease in bookings growth, and only a slight quarter-over-quarter increase in SaaS Average Revenue Per User (ARPU).
Conversely, proponents could highlight the significant long-term WiFi opportunity, improving profitability metrics, a SaaS Bookings ARPU of approximately $8, and a 105% net revenue retention in fiscal year 2023, along with the company's announcement of a roughly $50 million share buyback.
The firm expressed a balanced view, acknowledging concerns about the first half of 2024 but also showing optimism for the second half. BTIG suggested that SmartRent's mid-point revenue guidance, which anticipates a 16% year-over-year increase, appears achievable. They also pointed out that the adjusted EBITDA guidance for fiscal year 2024 could have been higher if not for the strategic decision to ramp up WiFi investment at this time.
BTIG affirmed its confidence in SmartRent's leading position within the fragmented Enterprise IoT market but cautioned that the company's journey to realize its full potential may encounter challenges. Despite lowering the price target, BTIG remains positive on SmartRent's prospects and thus maintains its Buy rating following the fourth-quarter results of 2023.
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