On Thursday, B.Riley raised the stock price target for Byrna Technologies Inc. (NASDAQ:BYRN) to $25.00, up from the previous $20.00, while keeping a Buy rating on the stock. The firm's decision follows Byrna Technologies' preliminary third-quarter results, which showed a significant increase in sales.
The company reported third-quarter sales of $20.8 million, a 194% rise year-over-year, and a slight increase from the $20.3 million recorded in the second quarter. This performance was attributed to strong sales across all end markets. The direct-to-consumer (DTC) segment was particularly bolstered by a celebrity endorsement program launched in September 2023.
Byrna Technologies faced challenges in the third quarter of the previous year due to a social media advertising ban that started affecting sales in March. Despite these hurdles and the third quarter typically being slower, the company's preliminary revenues surpassed estimates of $14.1 million and the consensus of $16.1 million.
The company also conducted successful promotional events, including a roughly 15% discount on its website and Amazon (NASDAQ:AMZN) around the July 4 celebrations, followed by a similar discount at the end of August. These promotions contributed to a $10.7 million increase in DTC revenue, a 220% surge. Sales through various channels saw triple-digit year-over-year growth, except for law enforcement, which experienced a strong double-digit increase.
Sales figures for different channels were reported as follows: web sales jumped 220% to $15.5 million, dedicated dealers increased 146% to $1.5 million, traditional dealers grew 114% to $2.4 million, law enforcement rose 49% to $0.5 million, and international sales skyrocketed 491% to $1.0 million.
In line with its production goals, Byrna Technologies produced 55,000 launchers in the third quarter. The firm anticipates that the increased DTC sales, lower component costs, and higher production volumes will lead to significant year-over-year gross margin expansion, although a sequential decrease is expected due to the promotional discounts.
B.Riley acknowledges Byrna's ongoing marketing success, strong product demand, and enhanced production capacity as reasons for increasing the price target and estimates. The firm has adjusted the target multiple from 4x to 5x, reiterating its Buy rating on Byrna Technologies' shares.
In other recent news, Byrna Technologies has been making significant strides in its financial performance and growth strategy. The company reported a net income of $2.1 million in Q2 2024, marking a remarkable contrast to the net loss experienced in the previous year. The company's net revenue also saw a 76% increase, rising to $20.3 million, while gross profit reached $12.6 million, making up 62% of the net revenue.
Byrna Technologies has also initiated a $10 million stock repurchase program. This move follows the company's history of stock buybacks, having repurchased $17.5 million of stock in previous programs. The program is aimed at enhancing shareholder value and will be funded through the company's existing cash balance and operational cash flow.
Furthermore, the company received a Buy rating from Roth/MKM, highlighting Byrna Technologies' potential in the non-lethal consumer self-defense market. The firm anticipates Byrna Technologies to experience a compound annual growth rate (CAGR) of over 37% in sales, driven by enhanced marketing efforts, an increase in the number of retail stores, and the launch of new products.
Byrna Technologies also announced plans for expansion, including the opening of company-owned retail stores and the establishment of a U.S.-based ammunition production facility. The company's management is optimistic about sustaining growth and improving margins in 2024 and 2025 through strategic partnerships and new advertising channels.
Despite a delay in the launch of a smaller launcher until the second half of 2025, Byrna remains focused on capturing a larger market share within the gun owners demographic.
InvestingPro Insights
Byrna Technologies Inc. (NASDAQ:BYRN) has been displaying notable financial metrics and market performance that could interest investors following the optimistic price target update from B.Riley. InvestingPro data shows a market capitalization of $338.24 million, underscoring the company's presence in the market.
Despite a negative P/E ratio of -115.39, indicating that the company is not currently profitable, Byrna's gross profit margin for the last twelve months as of Q2 2024 stands at an impressive 57.67%, suggesting efficient cost management relative to its revenue.
An InvestingPro Tip highlights that Byrna Technologies holds more cash than debt on its balance sheet, which can be a strong indicator of financial stability. Additionally, with an exceptional one-year price total return of 306.85%, investors have witnessed substantial growth in the stock's value.
It is worth noting that the company's stock has been trading close to its 52-week high, at 96.81% of that peak price. For investors seeking more insights, InvestingPro offers additional tips, including expectations of net income and sales growth for the current year, which align with the company's reported sales surge in the recent quarter.
For those interested in a deeper dive into Byrna Technologies' financial health and market performance, more InvestingPro Tips are available, providing a comprehensive analysis of the company's prospects. Visit InvestingPro for Byrna Technologies to explore these valuable insights.
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