H.C. Wainwright has adjusted its outlook on AudioEye (NASDAQ: NASDAQ:AEYE), a company specializing in digital accessibility solutions, by increasing its price target from $23.00 to $28.00 while maintaining a Buy rating.
The revision follows AudioEye's acquisition of ADA Site Compliance, a service offering audits and best practices for website accessibility in line with WCAG standards.
On Monday, AudioEye announced the purchase of ADA Site Compliance for $6.4 million, comprising $4.0 million in cash and a $2.4 million promissory note. Although specific financial details of ADA Site Compliance were not disclosed, it is estimated that the acquisition will add about $2.0 million to $3.0 million in annual revenue for AudioEye.
The revenue estimate suggests the transaction was completed at a forward multiple between 2.2x and 3.2x, which is notably lower than AudioEye's current enterprise value-to-revenue multiple of 7.8x.
The firm believes that AudioEye can capitalize on ADA Site Compliance's customer base to upsell high-margin services, potentially boosting revenues significantly in 2025 and beyond. This strategy could offer an even more favorable valuation for the company. H.C. Wainwright has expressed confidence in AudioEye's proven ability to identify, acquire, and integrate new businesses, suggesting that the acquisition should be perceived positively by investors.
In conjunction with the acquisition news, AudioEye also revised its financial guidance for 2024, raising its full-year revenue projections to between $35.15 million and $35.25 million, up from the previous estimate of $34.5 million to $34.8 million.
AudioEye's revenues rose to approximately $8.5 million, marking a 19% increase year-on-year. Additionally, AudioEye's annual recurring revenue (ARR) experienced a 60% surge from the previous quarter, contributing to a record adjusted EBITDA of around $1.5 million.
In response to these positive financial results, AudioEye has revised its full-year revenue guidance to a range of $34.5 million to $34.8 million. The adjusted EBITDA forecast was also revised upwards to between $6 million and $6.3 million.
In addition to these financial milestones, AudioEye has achieved HIPAA compliance and SOC 2 Type II certification, underscoring the company's commitment to data protection and security, particularly for clients in healthcare and industries with stringent data privacy regulations. The attainment of these certifications further solidifies AudioEye's position as a trusted partner for organizations seeking secure and accessible websites.
InvestingPro Insights
AudioEye's recent acquisition and positive analyst outlook are further supported by real-time data from InvestingPro. The company's market cap stands at $271.44 million, reflecting investor confidence in its growth potential. InvestingPro Tips highlight that AudioEye has impressive gross profit margins, which aligns with the firm's expectation of high-margin service upsells to ADA Site Compliance's customer base.
The company's revenue for the last twelve months as of Q2 2024 was $32.26 million, with a revenue growth of 3.91%. This data point provides context to AudioEye's revised 2024 revenue guidance of $35.15-$35.25 million, suggesting the company is on track for continued growth.
InvestingPro Tips also indicate that analysts predict the company will be profitable this year, which corresponds with the improved adjusted EBITDA guidance mentioned in the article. Additionally, the stock has shown a strong return over the last three months, with a price total return of 24.59%, reflecting positive market sentiment that aligns with H.C. Wainwright's bullish stance.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for AudioEye, providing a deeper understanding of the company's financial health and market position.
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