On Wednesday, Craig-Hallum adjusted its outlook on Atomera (NASDAQ:ATOM), reducing the price target to $7.00 from the previous $13.00. Despite the decrease, the firm maintained a Buy rating on the stock. The analyst at Craig-Hallum highlighted that Atomera's business model remains highly leveraged and, in light of the stock's decline this year, it represents an attractive entry point for investors willing to accept higher risk.
The second-quarter update from Atomera did not reveal any definitive milestones, but it did indicate that negotiations with JDA2 have begun. Additionally, the company expects to see some revenue from GaN this year and anticipates progress with STM potentially leading to revenue by the end of the year. The analyst noted the potential for significant returns driven by catalysts in the upcoming quarters.
The firm acknowledged that the market's anticipation for rapid gains, especially after the initial surge following the STM announcement, has been tempered by the scarcity of announcements and balance sheet concerns. These concerns have contributed to the stock's decline of over 55% year-to-date. However, the analyst believes that the current low price could offer an upside opportunity for investors.
Craig-Hallum underscored the importance of STM moving to production, which would be a pivotal moment for Atomera. This step could reduce risks for other companies in earlier evaluation stages and mark Atomera's "Zero To One" moment. The analyst reiterated the firm's Buy rating, adjusting the price target to reflect the balance of potential rewards against the risks presented by the current market conditions.
InvestingPro Insights
As investors consider the adjusted outlook on Atomera provided by Craig-Hallum, real-time data from InvestingPro offers additional context to the company's financial health and market performance. Atomera currently holds a market capitalization of $99.21 million, with a notably high revenue growth rate in the last twelve months as of Q1 2023, at 8014.29%. This growth is underscored by an impressive gross profit margin of 89.26%, indicating strong profitability on its products or services.
Despite these positive indicators, Atomera's price has experienced significant volatility, with a 1-year price total return of -64.08%, trading near its 52-week low at 33.73% of the peak. This aligns with the Craig-Hallum analyst's view of Atomera as a higher risk investment opportunity with potential for significant returns. Two InvestingPro Tips that may be particularly relevant for prospective investors are: Atomera holds more cash than debt on its balance sheet, suggesting a degree of financial stability, and analysts anticipate sales growth in the current year, indicating potential for future expansion.
For investors seeking more detailed analysis and additional InvestingPro Tips, there are 17 more tips available to help guide investment decisions. To access these insights, consider subscribing to InvestingPro, and use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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