Steven Mah, an analyst from TD Cowen, reiterated the Buy rating on Alpha Teknova (TKNO – Research Report). The associated price target is $6.00.
Steven Mah has given his Buy rating due to a combination of factors, including Alpha Teknova’s (TKNO) proactive management strategies and its promising financial outlook. Despite reporting Q4 revenues that were slightly below expectations, the company is anticipated to achieve a 10% year-over-year growth in its Lab Essentials segment. Additionally, management’s efforts to lower operational expenses and improve the path to profitability are seen as positive moves. This is evidenced by a reduction in workforce by 15% in January, which is expected to positively impact the profit and loss statement starting from the second quarter and the continued emphasis on operational expense discipline.
Furthermore, Mah considers the company’s FY24 revenue guidance of $35-38 million to be conservative, taking into account the ongoing challenges in the macroeconomic environment and the incremental growth in clinical customers. The company’s improved profitability outlook, due to cost reduction measures such as rationalizing stock-keeping units (SKUs) and streamlining operations, coupled with high gross margin contributions from incremental revenues, also contribute to the Buy rating. The management’s ability to consistently decrease capital expenditure and operating expense outflows over six quarters further reinforces the confidence in the company’s commitment to reducing cash burn. Mah’s updated financial model reflects this enhanced path to profitability and the potential to reach adjusted EBITDA breakeven at an annual revenue threshold of $50-55 million, with positive cash flow anticipated in 2025.
Mah covers the Healthcare sector, focusing on stocks such as Codexis, BioLife Solutions, and Twist Bioscience. According to TipRanks, Mah has an average return of -10.7% and a 28.87% success rate on recommended stocks.
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Alpha Teknova (TKNO) Company Description:
Alpha Teknova Inc provides critical reagents that enable the discovery, development, and production of biopharmaceutical products such as drug therapies, novel vaccines, and molecular diagnostics. Its product offerings include pre-poured media plates for cell growth and cloning, liquid cell culture media and supplements for cellular expansion, and molecular biology reagents for sample manipulation, resuspension, and purification.
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