On Monday, Synchronoss Technologies (NASDAQ: NASDAQ:SNCR) received an upgraded rating from Roth/MKM, moving from Neutral to Buy. The firm also increased the price target for the company's shares to $13.00, up from the previous target of $11.00. The adjustment comes after an evaluation of the company's financial performance, particularly in terms of its adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA).
The company's AEBITDA has seen a notable increase in the second and third quarters of 2024. This improvement has given Synchronoss Technologies a better position to manage its financial obligations, which include substantial interest costs of approximately $21 million per year and significant investment in software capitalization, tallying $9.9 million year-to-date in 2024.
The analyst noted that the current financial trajectory of Synchronoss Technologies suggests there is now a modest cushion that not only supports its existing debt and development expenses but also allows for some generation of free cash. This cash flow could potentially be used to further enhance the accrual of equity value.
Looking ahead, the firm anticipates a potential boost in the company's financial standing due to a prospective $28 million tax refund in 2025. This refund could significantly alleviate the company's debt load. Additionally, the recent pullback in share prices, coupled with the uptick in profitability, were cited as key reasons for reverting to a Buy rating.
The new price target of $13.00 reflects an increased forecast for AEBITDA, indicating a more optimistic outlook for Synchronoss Technologies' future financial performance.
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